Note to Exhibit 10.16
The following Trust Indenture and Security Agreements is
substantially identical in all material respects to two additional Trust
Indenture and Security Agreements except as follows:
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Aircraft (Tail No.)
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N588ML*
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N589ML
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N590ML
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__________
* Filed document
EXHIBIT 10.16
________________________________________________________________________________
TRUST INDENTURE AND SECURITY AGREEMENT N588ML
Dated as of September 21, 2000
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
Owner Trustee
and
ALLFIRST BANK,
Indenture Trustee
____________________________________
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N588ML
AND MANUFACTURER'S SERIAL NUMBER 7368
____________________________________
________________________________________________________________________________
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................................... 5
SECTION 1.01. Definitions........................................................ 5
ARTICLE II THE EQUIPMENT NOTES........................................................... 6
SECTION 2.01. Form of Equipment Notes............................................ 6
SECTION 2.02. Terms of Equipment Notes............................................ 6
SECTION 2.03. Payments from Indenture Estate Only................................ 7
SECTION 2.04. Method of Payment.................................................. 8
SECTION 2.05. Application of Payments............................................ 8
SECTION 2.06. Termination of Interest in Indenture Estate........................ 9
SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes............. 9
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes............... 10
SECTION 2.09. Payment of Expenses on Transfer.................................... 10
SECTION 2.10. Prepayment......................................................... 11
SECTION 2.11. Provisions Relating to Prepayment.................................. 12
SECTION 2.12. Purchase Upon an Event of Default.................................. 12
SECTION 2.13. Equipment Notes in Respect of Replacement Aircraft................. 14
SECTION 2.14. Increased Costs.................................................... 14
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE STATE............................................ 16
SECTION 3.01. Basic Rent Distribution............................................ 16
SECTION 3.02. Lease Termination, Event of Loss and Replacement................... 17
SECTION 3.03. Payment After Indenture Event of Default, etc...................... 18
SECTION 3.04. Certain Payments................................................... 21
SECTION 3.05. Other Payments..................................................... 21
SECTION 3.06. Payments to Owner Trustee.......................................... 21
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.................... 22
SECTION 3.08. Taxes; Withholding................................................. 22
ARTICLE IV COVENANTS; EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE................................................. 23
SECTION 4.01. Covenants of the Trust Company and the Owner Trustee............... 23
SECTION 4.02. Indenture Event of Default......................................... 24
SECTION 4.03. Certain Cure Rights................................................ 27
SECTION 4.04. Remedies........................................................... 29
SECTION 4.05. Return of Aircraft, etc............................................ 30
SECTION 4.06. Remedies Cumulative................................................ 31
SECTION 4.07. Discontinuance of Proceedings...................................... 32
SECTION 4.08. Waiver of Past Defaults............................................ 32
ARTICLE V DUTIES OF THE INDENTURE TRUSTEE............................................... 32
SECTION 5.01. Notices............................................................ 32
SECTION 5.02. Action Upon Instructions........................................... 33
SECTION 5.03. Indemnification.................................................... 34
SECTION 5.04. No Duties Except as Specified in Indenture or Instructions......... 34
SECTION 5.05. No Action Except Under Lease, Participation Agreement,
Indenture or Instructions.......................................... 35
SECTION 5.06. Replacement Airframes and Replacement Engines...................... 35
SECTION 5.07. Indenture Supplements for Replacements............................. 37
SECTION 5.08. Effect of Replacement.............................................. 38
SECTION 5.09. Certain Rights of Owner Trustee and Owner Participant.............. 38
ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE................................... 40
SECTION 6.01. Acceptance of Trusts and Duties.................................... 40
SECTION 6.02. Absence of Duties.................................................. 40
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents....... 41
SECTION 6.04. No Segregation of Monies; No Interest.............................. 41
SECTION 6.05. Reliance; Agents; Advice of Counsel................................ 41
SECTION 6.06. Capacity in Which Acting........................................... 42
SECTION 6.07. Compensation....................................................... 42
SECTION 6.08. May Become Noteholder.............................................. 42
SECTION 6.09. Further Assurances; Financing Statements........................... 42
SECTION 6.10. Assumption of Equipment Notes upon Purchase of Aircraft............ 43
ARTICLE VII SUCCESSOR TRUSTEES; SEPARATE TRUSTEES......................................... 43
SECTION 7.01. Notice of Successor Owner Trustee.................................. 43
SECTION 7.02. Resignation of Indenture Trustee; Appointment of Successor......... 43
SECTION 7.03. Appointment of Separate Trustees................................... 44
ARTICLE VIII SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS.............. 46
SECTION 8.01. Instructions of Majority; Limitations.............................. 46
SECTION 8.02. Trustees Protected................................................. 47
SECTION 8.03. Documents Mailed to Noteholders Indenture Supplement............... 48
ARTICLE IX MISCELLANEOUS................................................................. 48
SECTION 9.01. Termination of Indenture........................................... 48
SECTION 9.02. No Legal Title to Indenture Estate in Noteholders.................. 48
SECTION 9.03. Sale of Aircraft by Indenture Trustee is Binding................... 49
SECTION 9.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Noteholders......................... 49
SECTION 9.05. No Action Contrary to Lessee's Rights under the Lease.............. 49
SECTION 9.06. Notices............................................................ 49
SECTION 9.07. Severability....................................................... 49
SECTION 9.08. No Oral Modifications or Continuing Waivers........................ 49
SECTION 9.09. Successors and Assigns............................................. 49
SECTION 9.10. Headings........................................................... 50
SECTION 9.11. Governing Law...................................................... 50
SECTION 9.12. Counterpart Form................................................... 50
SECTION 9.13. Waiver of Jury Trial............................................... 50
SECTION 9.14. Submission to Jurisdiction......................................... 50
SECTION 9.15. Payment in Dollars................................................. 51
APPENDIX A DEFINITIONS
EXHIBIT A INDENTURE SUPPLEMENT
EXHIBIT B FORM OF EQUIPMENT NOTE
TRUST INDENTURE AND SECURITY AGREEMENT N588ML
TRUST INDENTURE AND SECURITY AGREEMENT N588ML dated as of September
21, 2000 between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as otherwise
specifically set forth herein (when acting in such individual capacity, "Trust
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Company"), but solely as owner trustee (the "Owner Trustee") under the Trust
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Agreement, as defined herein, and ALLFIRST BANK, a Maryland state-chartered
commercial bank (when acting in its individual capacity, "Allfirst"), as
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Indenture Trustee hereunder (the "Indenture Trustee").
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WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Trust Company have entered into
the Trust Agreement whereby, among other things, the Trust Company has declared
a certain trust for the use and benefit of the Owner Participant, subject,
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however, to the Lien of this Indenture, and the Owner Trustee is authorized and
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directed to execute and deliver this Indenture;
WHEREAS, the Owner Trustee desires by this Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee to each Loan
Participant of an Equipment Note evidencing participation by such Loan
Participant in the payment of Lessor's Cost for the Aircraft as provided in the
Participation Agreement, and (ii) to provide for the assignment, mortgage and
pledge by the Owner Trustee to the Indenture Trustee, as part of the Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's right,
title and interest in and to the Aircraft and the Indenture Documents and the
payments and other amounts received thereunder or in respect thereof in
accordance with the terms hereof, as security for, among other things, the Owner
Trustee's and Lessee's obligations to the Noteholders, and for the benefit and
security of the Noteholders;
WHEREAS, all things have been done to make the Equipment Notes to be
delivered to the Loan Participants on the Delivery Date, when executed by the
Owner Trustee and authenticated, issued and delivered hereunder, the valid
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, for the uses and purposes
herein set forth and in accordance with its terms, have been done and performed
and have happened;
1
- - GRANTING CLAUSE - -
NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment when due of the principal of and
Breakage Cost (if any) and interest on, and all other amounts due with respect
to, all Equipment Notes from time to time outstanding hereunder and the
performance and observance by the Owner Trustee of all the agreements, covenants
and provisions for the benefit of the Noteholders herein and in the
Participation Agreement and the Equipment Notes contained, and the prompt
payment of any and all amounts from time to time owing hereunder and under the
Participation Agreement and the other Operative Agreements by the Owner Trustee,
the Owner Participant or the Lessee to the Noteholders (collectively, the
"Secured Obligations"), and for the uses and purposes and subject to the terms
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and provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes by the holders
thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee
at or before the delivery hereof, the receipt whereof is hereby acknowledged,
the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee and
its successors and assigns, for the security and benefit of the Noteholders, as
aforesaid, a security interest in and mortgage lien upon, all estate, right,
title and interest of the Owner Trustee in, to and under the following described
property, rights and privileges, other than Excluded Payments and subject to the
rights of the Owner Trustee and the Owner Participant set forth herein (which
collectively, excluding Excluded Payments but including all property hereafter
specifically subjected to the Lien of this Indenture by an Indenture Supplement
or any other mortgage supplemental hereto shall constitute the "Indenture
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Estate"), to wit:
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(1) the Aircraft (including the Airframe and the Engines) and all
replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire title as provided herein and
in the Lease, all as more particularly described in the Indenture
Supplement executed and delivered with respect to the Aircraft or any
such replacements or substitutions therefor, as provided in this
Indenture, and all records, logs, manuals and data and inspection,
modification and overhaul records and other documents at any time
maintained with respect to the foregoing property;
(2) the Lease and all Rent thereunder, including, without
limitation, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition and other payments of any kind thereunder and including
all rights of the Owner Trustee to execute any election or option or
to give any notice, consent, waiver, or approval under or in respect
of the Lease or to accept any surrender of the Aircraft or any part
thereof, as well as any rights, powers or remedies on the part of the
Owner Trustee, whether arising under the Lease or by statute or at law
or in equity, or otherwise, arising out of any Event of Default and to
do any and all other things whatsoever which the Owner Trustee is or
may be entitled to do under the Lease;
2
(3) the Participation Agreement, the Warranty ▇▇▇▇ of Sale, the
FAA ▇▇▇▇ of Sale, the Purchase Agreement (to the extent assigned by
the Purchase Agreement Assignment), the Purchase Agreement Assignment,
the PAA Consent, the Engine Warranty Assignment, the Warranties (as
defined in the Engine Warranty Assignment), the Engine Manufacturer's
Consent, any Sublease and any instrument assigning such Sublease to
the Owner Trustee (including without limitation, all rights to amounts
paid or payable to the Owner Trustee thereunder and all rights to
enforce such payments) (collectively, and together with the Lease, the
"Indenture Documents") and including all rights of the Owner Trustee
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to execute any election or option or to give any notice, consent,
waiver or approval under or in respect thereof and to do any and all
other things which the Owner Trustee is or may be entitled to do
thereunder;
(4) all tolls, rents, issues, profits, revenues and other income
of the property subjected or required to be subjected to the Lien of
this Indenture including all payments or proceeds payable to the Owner
Trustee after termination of the Lease with respect to the Aircraft as
the result of the sale, lease or other disposition thereof, and all
estate, right, title and interest of every nature whatsoever of the
Owner Trustee in and to the same and every part thereof;
(5) all insurance and requisition proceeds and all other
payments of any kind with respect to the Aircraft, including but not
limited to the insurance required under Section 9 of the Lease;
(6) all monies and securities deposited or required to be
deposited with the Owner Trustee or the Indenture Trustee pursuant to
any term of this Indenture or the Lease or required to be held by the
Indenture Trustee hereunder; and
(7) all proceeds of the foregoing.
BUT EXCLUDING, in all events from each of the foregoing clauses (1)
through (7), inclusive, and the Indenture Estate, all Excluded Payments, and
SUBJECT TO, the rights of the Owner Trustee and the Owner Participant under
Section 5.09.
The Owner Trustee is concurrently with the delivery hereof delivering to the
Indenture Trustee an executed chattel paper original counterpart of each of the
Lease and the Lease Supplement covering the Aircraft, together with executed
copies of the Trust Agreement and each of the other Indenture Documents (other
than the Participation Agreement and the FAA ▇▇▇▇ of Sale). All property
referred to in this Granting Clause, whenever acquired by the Owner Trustee,
shall secure the Secured Obligations at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Trustee, shall, without further conveyance, assignment or act by the
Owner Trustee or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.
3
- - HABENDUM CLAUSE - -
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the Noteholders, and for the uses and purposes and subject to the
terms and provisions set forth in this Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under the Indenture
Documents to perform all of the obligations assumed by it thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Noteholders shall have no obligation or liability
under any thereof by reason of or arising out of the assignment hereunder, nor
shall the Indenture Trustee or the Noteholders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, except as therein or herein
expressly provided, to make any payment, or to make any inquiry as to the nature
or sufficiency of any payment received by it, or present or file any claim, or
take any action to collect or enforce the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, coupled with an
interest and with full power (in the name of the Owner Trustee or otherwise) to
ask, require, demand, receive, compound and give acquittance for any and all
monies and claims for monies (in each case including insurance and requisition
proceeds but in all cases excluding Excluded Payments) due and to become due
under or arising out of the Indenture Documents and all other property which now
or hereafter constitutes part of the Indenture Estate, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or to
take any action or to institute any proceedings which the Indenture Trustee may
deem to be necessary or advisable in the premises. Without limiting the
provisions of the foregoing, during the continuance of any Indenture Event of
Default but subject to the terms hereof and of the other Operative Agreements,
the Indenture Trustee shall have the right under such power of attorney to ▇▇▇
for, compound and give acquittance for, to accept any offer of any purchaser to
purchase the Airframe and Engines as provided herein or in the Lease and upon
such purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate ▇▇▇▇ of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may reasonably deem necessary or appropriate to protect
and preserve the right, title and interest of the Indenture Trustee in and to
such Rent and other sums and the security intended to be afforded hereby;
provided no action of the Indenture Trustee pursuant to this paragraph shall
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increase the obligations or liabilities of the Owner Trustee to any Person
beyond those obligations and liabilities specifically set forth in this
Indenture and the other Operative Agreements. Under the Lease the Lessee is
directed to make all payments of Rent (other than Excluded Payments) and all
other amounts which are required to be paid to or deposited with the Owner
Trustee pursuant to the Lease (other than Excluded
4
Payments), directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application as provided in this Indenture.
The Owner Trustee agrees that promptly on receipt thereof, it will transfer to
the Indenture Trustee any and all monies from time to time received by it
constituting part of the Indenture Estate, for distribution by the Indenture
Trustee pursuant to this Indenture.
The Owner Trustee does hereby warrant and represent that (except as
permitted herein) it has not assigned or pledged any of its right, title, and
interest hereby assigned to anyone other than the Indenture Trustee.
The Owner Trustee does hereby ratify and confirm the Indenture
Documents and does hereby agree that (except as permitted herein) it will not
take or omit to take any action, the taking or omission of which would result in
an alteration or impairment of any of the Indenture Documents or of any of the
rights created by any thereof or the assignment hereunder.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver any and all such further instruments and documents
as the Indenture Trustee may reasonably request in obtaining the full benefits
of this assignment and of the rights and powers herein granted.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there are hereby expressly excluded from the foregoing grant,
bargain, sale, assignment, transfer, conveyance, mortgage, pledge and security
interest all Excluded Payments. Further, nothing in the Granting Clause or any
of the preceding paragraphs shall impair in any respect the rights of the Owner
Trustee or the Owner Participant under Section 5.09.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For all purposes of this Indenture, terms
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defined in the heading and recitals of this Indenture are used as so defined and
capitalized terms used but not defined in this Indenture are used as defined in
Appendix A hereto (such definitions to be equally applicable to both the
singular and plural forms of the terms defined). Any agreement referred to below
shall mean such agreement as amended, supplemented and modified from time to
time in accordance with the applicable provisions thereof and of the other
Operative Agreements. Any Person referenced to herein shall mean such Person and
its successors and permitted assigns. Unless otherwise specified, Section and
Article references are to Sections and Articles of this Indenture.
5
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes and the
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Indenture Trustee's certificate of authentication to appear on the Equipment
Notes shall each be substantially in the form set forth on Exhibit B.
SECTION 2.02. Terms of Equipment Notes. (a) On the Delivery Date the
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Owner Trustee shall issue an Equipment Note to each Loan Participant in an
aggregate original principal amount in Dollars equal to the percentage of
Lessor's Cost set forth opposite such Loan Participant's name on Schedule I to
the Participation Agreement. Each Equipment Note shall bear interest on the
unpaid principal amount thereof from time to time outstanding from and including
the date thereof until such principal amount is paid in full at the Applicable
Rate, payable in arrears on each Payment Date and on the date such Equipment
Note is paid in full. Interest hereunder and under the Equipment Notes shall be
calculated on the basis of a year of 360 days consisting of twelve 30-day
months; provided that interest on past due amounts shall be calculated on the
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basis of a year of 360 days and actual days elapsed.
(b) The principal of the Equipment Notes shall be due and payable on
each Payment Date in the number of installments and in the respective amounts
for such installments set forth at Annex A to each Equipment Note.
(c) Each Equipment Note shall bear interest at the Past Due Rate on
any principal thereof and, to the extent permitted by Applicable Law, interest
and other amounts due thereunder and hereunder, not paid when due (whether at
stated maturity, by acceleration or otherwise), for any period during which the
same shall be overdue, payable by the Owner Trustee on demand from the
respective Noteholder given through the Indenture Trustee. Interest under this
clause (c) shall be calculated on the basis of a year of 360 days and the actual
number of days elapsed.
(d) The Equipment Notes shall be executed on behalf of the Owner
Trustee by one of its authorized officers. Equipment Notes bearing the
signatures of individuals who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Equipment Notes or did not hold such offices at the respective
dates of such Equipment Notes. No Equipment Notes shall be issued hereunder
except those provided for in Section 2.02(a) and any Equipment Notes issued in
exchange or replacement therefor pursuant to the terms of this Indenture. The
Equipment Notes issued under this Section 2.02 shall each be dated the Delivery
Date. No Equipment Note shall be secured by or entitled to any benefit under
this Indenture or be valid or obligatory for any purpose, unless there appears
on such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Note
6
shall be conclusive evidence, and the only evidence, that such Equipment Note
has been duly authenticated and delivered hereunder.
The principal amount of the Equipment Note issued to a Loan Participant on
the Delivery Date shall not exceed such Loan Participant's Commitment.
SECTION 2.03. Payments from Indenture Estate Only. Except as
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otherwise expressly provided in the next succeeding sentence of this Section
2.03 or in Section 2.12, all payments to be made by the Owner Trustee under this
Indenture shall be made only from the income and the proceeds from the Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Indenture Estate to enable the Owner Trustee to make
payments in accordance with the terms hereof. Each Noteholder, by its acceptance
of an Equipment Note, and the Indenture Trustee, each agrees that it will look
solely to the income and proceeds from the Indenture Estate (together with any
amounts made available by the Owner Participant pursuant to Sections 2.12 and
4.03 hereof) to the extent available for distribution to it as above provided
and that none of the Owner Participant, the Trust Company or the Indenture
Trustee is personally liable to it for any amounts payable or any liability
under this Indenture or such Equipment Note or for any amounts payable or
liability under any Equipment Note or this Indenture, except, in the case of the
Trust Company and the Indenture Trustee, as expressly provided herein or in the
Participation Agreement; provided, however, that nothing contained in this
Section 2.03 shall be construed to limit the exercise and enforcement in
accordance with the terms of this Indenture or any other Operative Agreement or
such other agreements of rights and remedies against the Indenture Estate or any
such other Person as to their respective obligations to the Noteholders
thereunder.
The Indenture Trustee hereby waives to the fullest extent permitted by law
the benefit of the provisions of Section 1111(b) of Title 11 of the Bankruptcy
Code with respect to recourse against the Owner Trustee (in its individual
capacity) and the Owner Participant on account of any amount payable as
principal of, Breakage Cost, if any, and interest on the Equipment Notes,
provided that such waiver shall not preclude the Indenture Trustee from electing
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application of Section 1111(b) (2) of Title 11 of the Bankruptcy Code. Each Loan
Participant, each Noteholder and the Indenture Trustee agree that, if (i) the
Trust Estate or the trust created by the Trust Agreement becomes a debtor
subject to the reorganization provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statutes, (ii) pursuant to such
reorganization provision, the Owner Participant is held to have recourse
liability to the Indenture Trustee or any Noteholder directly or indirectly on
account of any amount payable as principal, interest or premium on the Equipment
Notes, and (iii) any Noteholder or the Indenture Trustee actually receives any
Recourse Amount which reflects any payment by the Owner Participant on account
of (ii) above, then such Noteholder or the Indenture Trustee, as the case may
be, shall promptly refund to the Owner Participant such Recourse Amount. For
purposes of this Section 2.03, "Recourse Amount" means the amount by which the
portion of such payment by the Owner Participant on account of clause (ii) above
received by such Noteholder or Indenture Trustee exceeds the amount which would
have been received by such Noteholder or the Indenture Trustee if the Owner
Participant had not become subject to the recourse liability referred to in (ii)
above. Nothing contained in this Section shall prevent any
7
Noteholder or the Indenture Trustee from enforcing any individual obligation
(and retaining the proceeds thereof) of the Owner Participant under the
Participation Agreement or any other Operative Agreement to the extent therein
provided, for which the Owner Participant has expressly agreed by the terms of
the Participation Agreement to accept individual responsibility.
SECTION 2.04. Method of Payment. Principal and interest and other
-----------------
amounts due hereunder or under the Equipment Notes or in respect hereof or
thereof shall be payable in Dollars in immediately available funds prior to
11:00 a.m., New York time, on the due date thereof, to the Indenture Trustee at
its Corporate Trust Department located at the address specified in Section 2.07
and the Indenture Trustee shall, subject to the terms and conditions hereof,
remit all such amounts so received by it to the Noteholders at such account or
accounts at such financial institution or institutions as the Noteholders shall
have designated to the Indenture Trustee in writing (which in the case of each
initial Noteholder shall be its respective account designated on Schedule II to
the Participation Agreement under the heading "Loan Participants"), in
immediately available funds for distribution to the relevant Noteholders, such
payment to be made, in the case of any such designated account in New York, New
York, prior to 2:00 p.m., New York time, on the due date thereof. In the event
the Indenture Trustee, through negligence or willful misconduct, shall fail to
make any such payment as provided in the immediately foregoing sentence after
its receipt of funds at the place and prior to the time specified above, the
Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate the Noteholders for loss of use of funds in a commercially reasonable
manner, and the Owner Trustee shall have no liability for and the Indenture
Estate shall not secure any such loss or any overdue interest on the Equipment
Notes in connection with any such failure of the Indenture Trustee to timely
distribute funds. All such payments by the Owner Trustee and the Indenture
Trustee shall be made without presentment or surrender of any Equipment Note and
free and clear of and without reduction for account of all wire and other like
charges. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee may deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner of such Equipment Note for the purpose of receiving payment of
all amounts payable with respect to such Equipment Note and for all other
purposes whether or not such Equipment Note shall be overdue, and neither the
Owner Trustee nor the Indenture Trustee shall be affected by any notice to the
contrary. If any sum payable under the Equipment Notes or under this Indenture
falls due on a day which is not a Business Day, then such sum shall be payable
on the next succeeding Business Day, without additional interest as a result of
such extension so long as such payment is made on such Business Day; provided
that if by virtue of such extension such amount would be paid in the next
succeeding calendar month, such amount shall be paid on the next preceding
Business Day.
SECTION 2.05. Application of Payments. Each payment of principal and
-----------------------
interest or other amounts due in respect of each Equipment Note shall, except as
otherwise expressly provided herein, be applied, first, to the payment of any
-----
amount (other than the principal of or interest on such Equipment Note) due in
respect of such Equipment Note, second, to the payment of interest on such
------
Equipment Note (as well as any interest on overdue principal and, to the extent
permitted by law, interest and other amounts payable thereunder) due thereunder,
third, to the
-----
8
payment of the principal of such Equipment Note then due and fourth, the
------
balance, if any, remaining thereafter, to the payment of the principal of such
Equipment Note remaining unpaid (provided that such Equipment Note shall not be
subject to prepayment or purchase without the consent of the affected Noteholder
except as permitted by Sections 2.10, 2.11, 2.12 and 2.14). The amounts paid
pursuant to clause fourth above shall be applied to the installments of
principal of such Equipment Note in inverse order of maturity.
SECTION 2.06. Termination of Interest in Indenture Estate. A
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Noteholder shall not, as such, have any further interest in, or other right with
respect to, the Indenture Estate when and if the principal amount of and
Breakage Cost, if any, and interest on and other amounts due under all Equipment
Notes held by such Noteholder and all other sums due to such Noteholder
hereunder and under the other Operative Agreements shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes.
------------------------------------------------------
The Indenture Trustee agrees with the Owner Trustee that the Indenture Trustee
shall keep a register (herein sometimes referred to as the "Register") in which
--------
provisions shall be made for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. The Register shall be kept at the
Indenture Trustee's Corporate Trust Department located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Mail Code 101-591, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at the office of any
successor indenture trustee, and the Indenture Trustee is hereby appointed the
"Registrar" for the purpose of registering Equipment Notes and transfers of
Equipment Notes as herein provided. Upon surrender for registration of transfer
of any Equipment Note at the Indenture Trustee's Corporate Trust Department, the
Owner Trustee shall execute, and the Indenture Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Equipment Notes of a like aggregate principal amount. At the option of the
Noteholder, its Equipment Notes may be exchanged for other Equipment Notes of
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Equipment Notes to be exchanged at the Indenture Trustee's
Corporate Trust Department. Each new Equipment Note issued upon transfer or
exchange shall be in a principal amount of at least $1,000,000 (except as may be
necessary to evidence the entire outstanding principal amount of an Equipment
Note) and dated the Delivery Date. Whenever any Equipment Notes are so
surrendered for exchange, the Owner Trustee shall execute, and the Indenture
Trustee shall authenticate and deliver, the Equipment Notes which the Noteholder
making the exchange is entitled to receive. All Equipment Notes issued upon any
registration of transfer or exchange of Equipment Notes shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Indenture, as the
Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer or
exchange, shall (if so required by the Owner Trustee or the Indenture Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Indenture Trustee duly executed by the
Noteholder thereof or his attorney duly authorized in writing, and the Indenture
Trustee may require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act. The Indenture Trustee shall make a notation on
each new Equipment Note or Equipment Notes of the amount of all payments of
principal previously made on the old Equipment
9
Note or Equipment Notes with respect to which such new Equipment Note is issued
and the date to which interest accrued on such old Equipment Note or Equipment
Notes has been paid. The Indenture Trustee shall not be required to register the
transfer or exchange of any surrendered Equipment Notes as above provided during
the ten (10) Business Day period preceding the due date of any payment on such
Equipment Notes. Any Noteholder may transfer any or all of its Equipment Notes
to any Person other than the Lessee or its Affiliates. The Owner Trustee and the
Indenture Trustee shall treat the Person in whose name each Equipment Note is
registered on the Register as the Noteholder with respect thereto for all
purposes hereof until due presentment for registration of transfer as provided
in this Section 2.07. The Indenture Trustee shall give the Lessee and each
Noteholder prompt notice of such transfer of an Equipment Note under this
Section 2.07. Each holder of an Equipment Note, by its acceptance thereof,
agrees that any transfer of any Equipment Note acquired by it hereunder shall
not be effected unless the transferee shall have delivered to the Indenture
Trustee, the Lessee, the Owner Participant and the Owner Trustee (i) a
representation as to the matters specified in Section 5.08 of the Participation
Agreement and, notwithstanding the above, such transferee by its acceptance of
an Equipment Note shall be deemed to have made such a representation and (ii) an
agreement to be bound by and comply with the provisions of the Participation
Agreement and this Indenture binding on a Loan Participant and, notwithstanding
the above (but without derogation to the requirements for delivery of such
agreement), such transferee by its acceptance of an Equipment Note shall be
deemed to have made such representations and such agreement.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes.
----------------------------------------------------
If any Equipment Note shall become mutilated, destroyed, lost or stolen, the
Owner Trustee shall, upon the written request of the affected Noteholder,
execute, and the Indenture Trustee shall authenticate and deliver in replacement
thereof, a new Equipment Note in the same principal amount, dated the date of
such Equipment Note and designated as issued under this Indenture. If the
Equipment Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee. If the Equipment Note being replaced has
been destroyed, lost or stolen, the affected Noteholder shall furnish to the
Owner Trustee and the Indenture Trustee such security or indemnity as may be
reasonably required by them to hold the Owner Trustee and the Indenture Trustee
harmless and evidence satisfactory to the Owner Trustee and the Indenture
Trustee of the destruction, loss or theft of such Equipment Note and of the
ownership thereof; provided, however, that if the affected Noteholder is an
-------- -------
original party to the Participation Agreement or an Affiliate thereof, the
written notice of such destruction, loss or theft and such ownership and the
written undertaking of such Noteholder delivered to the Owner Trustee and the
Indenture Trustee to hold harmless the Owner Trustee and the Indenture Trustee
in respect of the execution, authentication and delivery of such new Equipment
Note shall be sufficient evidence, security and indemnity.
SECTION 2.09. Payment of Expenses on Transfer. Upon the issuance of
-------------------------------
a new Equipment Note or new Equipment Notes pursuant to Section 2.07 or 2.08,
the Owner Trustee and/or the Indenture Trustee may require from the party
requesting such new Equipment Note or Equipment Notes payment of a sum
sufficient to reimburse the Owner Trustee and/or the Indenture Trustee for, or
to provide funds for, the payment of any tax or other governmental charge in
10
connection therewith or any charges and expenses connected with such tax or
other governmental charge paid or payable by the Owner Trustee or the Indenture
Trustee.
SECTION 2.10 Prepayment. (a) The Owner Trustee may, in accordance
----------
with Section 2.10(b), if requested to do so by the Lessee and upon no less than
30 days' prior irrevocable notice to the Indenture Trustee and the Noteholders,
on any date on or after the fifth anniversary of the Delivery Date prepay in
whole but not in part the Equipment Notes then outstanding (except in the case
of a prepayment which occurs after a Noteholder has requested the payment of (x)
any Increased Costs pursuant to Section 2.14(a) or (y) any amounts pursuant to
Article 6 of the Participation Agreement in respect of withholding Taxes, in
which case such prepayment, if elected to be made by the Owner Trustee, may be
made at any time) at the principal amount thereof, together with accrued
interest thereon to the date of prepayment plus the Breakage Cost (if any) and
all other amounts due to the holders of the Equipment Notes hereunder,
thereunder and under the other Operative Agreements.
(b) The Equipment Notes shall be prepaid in full but not in part,
together with accrued interest thereon to the date of prepayment and all other
amounts due thereunder and hereunder and under the other Operative Agreements to
the Noteholders:
(i) Upon the occurrence of an Event of Loss with respect to the
Airframe (unless pursuant to Section 8(a)(i) of the Lease and Section 5.06
a Replacement Airframe, together with the same number of Replacement
Engines as the Engines, if any, subject to such Event of Loss, shall have
been substituted for the Airframe and/or the Engines subject to such Event
of Loss), on the earlier of the date of the Lessee's payment with respect
to such Event of Loss in Section 8(a)(ii) of the Lease and the last day
permitted for such payment under said Section 8(a)(ii);
(ii) Upon the Lessee's election to terminate the Lease with respect
to the Aircraft as provided in Section 14(a) of the Lease, on the
Termination Date of the Lease as provided in said Section 14(a);
(iii) Upon the Lessee's election to purchase the Aircraft on the EBO
Date as provided in Section 13(b) of the Lease, on the date of such
purchase as provided in said Section 13(b) of the Lease (unless Lessee has
assumed the Owner Trustee's obligations pursuant to and in accordance with
Section 5.10 of the Participation Agreement); and
(iv) Upon the Lessee's election to refinance the Equipment Notes as
provided in Section 13.01 of the Participation Agreement, and upon no less
than 30 days' prior notice to the Indenture Trustee, on the closing date of
such refinancing as provided in said Section 13.01 of the Participation
Agreement.
The Owner Trustee will give notice of prepayment under this Section 2.10(b) to
Indenture Trustee and the original Noteholder (so long as it holds an Equipment
Note) promptly after receipt of the
11
Lessee's notice of payment under Section 8(a)(ii), 13(b) or 14(a) of the Lease,
or refinancing under Section 13.01 of the Participation Agreement, as the case
may be. Any prepayment of the Equipment Notes pursuant to this Section 2.10(b)
shall be accompanied by the Breakage Cost (if any) for each Noteholder.
SECTION 2.11. Provisions Relating to Prepayment. (a) The Owner
---------------------------------
Trustee shall have no right to prepay the principal amount of the Equipment
Notes, in whole or in part, or purchase the Equipment Notes except as permitted
by Sections 2.10, 2.11, 2.12 and 2.14. Any such prepayment shall, except as
otherwise expressly provided in this Indenture, Section 13.01 of the
Participation Agreement or Section 13(b) of the Lease, as the case may be, be
made by the Owner Trustee only on a date coincident with a Termination Date and
upon notice to the Indenture Trustee, the Noteholders and the Lessee provided
for in Section 2.10 or in Section 8(a)(ii) or 14(a) of the Lease, as the case
may be. Notice of prepayment having been given as aforesaid, the principal
amount of the Equipment Notes so to be prepaid, plus accrued interest thereon to
the date of prepayment, together with the Breakage Cost, if any, if required to
be paid as herein provided, shall become due and payable on the prepayment date;
provided, however, with respect to any prepayment under Section 2.10(b), if any
-------- -------
applicable notice of termination is timely revoked (or if the Lease does not in
fact so terminate) pursuant to Section 14 of the Lease or if all amounts due and
payable pursuant to Section 8(a)(ii), 13(b) or 14(a) of the Lease, or Section
13.01 of the Participation Agreement, as the case may be, are not paid or the
refinancing is not consummated pursuant to Section 13.01 of the Participation
Agreement, or if the Lessee assumes the Owner Trustee's obligations under the
Equipment Notes and this Indenture pursuant to and in accordance with Section
5.10 of the Participation Agreement, then the principal amount of the Equipment
Notes shall not be deemed to have been due and no Breakage Cost, if any, shall
be payable as a result thereof but the Breakage Cost, if any, incurred by any
Noteholder resulting from the Indenture Trustee receiving notice of such failure
to pay less than three Business Days prior to the scheduled prepayment date
(together with any resulting costs associated with any rehedging deemed
necessary by such Noteholder) shall be payable as a result thereof.
(b) On the date fixed for prepayment under Section 2.10, immediately
available funds in Dollars shall be deposited by the Owner Trustee in the
account of the Indenture Trustee at the place and by the time and otherwise in
the manner provided in Section 2.04, in an amount equal to the principal amount
of Equipment Notes to be prepaid together with accrued and unpaid interest
thereon to the date fixed for such prepayment, all Breakage Cost, if any, and
all other amounts due to the holders of the Equipment Notes hereunder,
thereunder and under the other Operative Agreements.
SECTION 2.12. Purchase Upon an Event of Default.
---------------------------------
(a) If (x) an Event of Default (without regard to any waiver thereof
by the Indenture Trustee) has occurred and has been continuing for a period of
190 days or (y) the Equipment Notes shall have become due and payable as
provided in Section 4.04(b) or 4.04(c) or the Indenture Trustee has taken action
or notified the Owner Trustee that it intends to take action to
12
foreclose the Lien of this Indenture of otherwise commence the exercise of any
significant remedy under this Indenture or the Lease or (z) an Event of Default
(without regard to any waiver thereof by the Indenture Trustee) has occurred and
is continuing for a period of less than 190 days, the Owner Participant may, at
any time (but, in the case of clauses (x) and (z), so long as no Indenture Event
of Default which is not or does not arise out of a Default or an Event of
Default has occurred and is continuing), elect to purchase all, but not less
than all, Equipment Notes then outstanding at the purchase price specified
below. Upon receipt of written notice of such election from the Owner
Participant, which notice in order to be effective shall state that it is
irrevocable (and shall constitute a recourse obligation of Owner Participant)
and shall designate a date not more than fourteen calendar days or fewer than
three Business Days thereafter as the purchase date, each Noteholder agrees that
it will, upon payment to it in the manner provided for in Section 2.04 from the
Owner Participant of a purchase price in an amount equal to the aggregate unpaid
principal amount of all Equipment Notes then held by such Noteholder together
with accrued and unpaid interest thereon to the date of payment, plus LIBOR
Break Amount, if any, plus Applicable Break Amount, if any, plus all reasonable
expenses of the Indenture Trustee or such Noteholder associated therewith (and
all other sums then due and payable to such Noteholder hereunder, under such
Equipment Notes and the other Operative Agreements), forthwith sell, assign,
transfer and convey to the Owner Participant (without recourse, representation
or warranty of any kind except for its own acts), all of the right, title and
interest of such Noteholder in and to the Indenture Estate, this Indenture, all
Equipment Notes held by such Noteholder and the other Operative Agreements
(excluding all right, title and interest under any of the foregoing to the
extent such right, title or interest is with respect to an obligation not then
due and payable or past due (other than any claims in respect of past due
interest or other amounts to the extent included in the purchase price of the
Equipment Notes), with respect to any action or inaction or state of affairs
occurring or existing prior to such sale) and the Owner Participant shall assume
all of such Noteholder's obligations under the other Operative Agreements and
this Indenture arising subsequent to such purchase and sale. The Indenture
Trustee shall not exercise any remedies hereunder and, without the consent of
the Owner Participant, under the Lease, during the period from the time of
receipt of such notice of such election until the date on which such purchase is
required to occur pursuant to the terms of the preceding sentence. If the Owner
Participant shall so request, such Noteholder will comply with all the
provisions of Section 2.07 (other than those relating to Securities Act
compliance and those obligations set out in the last sentence of Section 2.07)
to enable new Equipment Notes to be issued to the Owner Participant in such
denominations as the Owner Participant shall request. In the case of any such
purchase, upon the request of any Noteholder the Owner Participant shall furnish
to the Noteholders evidence that such transfer and conveyance are exempt from
registration under the Securities Act, and do not violate any registration
provision of any applicable state securities laws (which evidence may include an
opinion of counsel for the Owner Participant satisfactory to the Noteholders).
All charges and expenses required pursuant to Section 2.09 in connection with
the issuance of any such new Equipment Note pursuant to this Section shall be
borne by the Owner Participant.
(b) If in connection with any purchase contemplated by this Section
2.12 there shall be Swap Breakage Gain, subject to due compliance by the Owner
Participant with its obligations specified in Section 2.12(a), each Noteholder
will remit to the Owner Participant,
13
promptly following receipt thereof, such Noteholder's pro rata share of the
Applicable Break Amount.
(c) "Applicable Break Amount" means (i) if a purchase of the Equipment
-----------------------
Notes is effected pursuant to clause (z) of Section 2.12(a) hereof, the Swap
Break Amount (as if the Equipment Notes were being prepaid pursuant to Section
2.10 hereof) or (ii) if a purchase of the Equipment Notes is effected pursuant
to clause (x) or (y) of Section 2.12(a) hereof, an amount of Swap Break Amount
(as if the Equipment Notes were being prepaid pursuant to Section 2.10 hereof)
not exceeding the Breakage Percentage of the then outstanding principal amount
of the Equipment Notes.
SECTION 2.13 Equipment Notes in Respect of Replacement Aircraft. Upon
--------------------------------------------------
the execution and delivery of an Indenture Supplement covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 5.06, each Equipment
Note shall be deemed to have been issued in connection with such Replacement
Airframe and/or Replacement Engine and each Equipment Note issued thereafter
upon a transfer or exchange of, or as a replacement for, an Equipment Note,
shall be designated as having been issued in connection with such Replacement
Airframe and/or Replacement Engine, but without any other change therein except
as provided for in this Article II.
SECTION 2.14 Increased Costs. (a) The Owner Trustee shall pay
---------------
directly to each Noteholder from time to time on written request given to the
Owner Trustee and the Lessee such amounts as such Noteholder may determine to be
necessary to compensate such Noteholder for any increase in actual costs that
such Noteholder determines are attributable to its making or maintaining of the
loans evidenced by its Equipment Notes or funding arrangements (including any
Swap Transaction) utilized in connection with such loans, or any reduction in
any amount receivable by such Holder hereunder in respect of any of such loans
or such arrangements (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
----------------
Regulatory Change that:
(i) imposes any tax that is the functional equivalent of any
reserve, special deposit or similar requirement of the sort covered by clause
(ii) below; or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (including any Reserve Requirement) relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Noteholder (including, without limitation, any of such loans or any deposits
referred to in the definition of "LIBOR Rate" in Appendix A), or any such
obligations; or
(iii) imposes any other condition which is the functional equivalent
of the foregoing affecting its Equipment Notes (or of any such extensions of
credit or liabilities), or any such obligation.
14
(b) Without limiting the effect of the foregoing provisions of this
Section 2.14 (but without duplication), the Owner Trustee shall pay directly to
each Noteholder from time to time on written request given to the Owner Trustee
and the Lessee such amounts as such Noteholder may determine to be necessary to
compensate such Noteholder (or, without duplication, the holding company of
which such Noteholder is a subsidiary) for any increase in actual costs that it
determines are attributable to the maintenance by such Noteholder (or any
lending office or such holding company), pursuant to any law or regulation or
any interpretation, directive or request (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful so long as
compliance therewith is standard banking practice in the relevant jurisdiction)
of any court or governmental or monetary authority following any Regulatory
Change (excluding any Regulatory Change the effect of which is the
implementation of the Basel Accord as in effect on the date hereof), of capital
in respect of its Equipment Notes or funding arrangements (including any Swap
Transaction) utilized in connection with the Equipment Notes; such compensation
to include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of such Noteholder (or any lending office or such
bank holding company) could have achieved but for such law, regulation,
interpretation, directive or request. For purposes of this Section 2.14(b),
"Basel Accord" shall mean the proposals for risk-based capital framework
------------
described by the Basel Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988.
(c) Each Noteholder shall promptly notify the Owner Trustee and Lessee
of any event giving rise to compensation under this Section 2.14 as soon as
practicable, but in any event within 60 days of obtaining actual knowledge
thereof. The Owner Trustee shall not be obligated to pay any amounts pursuant
to this Section 2.14 unless the affected Noteholder shall have first furnished
to the Owner Trustee and the Lessee a certificate setting forth, in reasonable
detail, the calculation of the amount of such increased cost (which certificate
shall be conclusive absent manifest error) and certifying that such increased
cost is of a type referenced in this Section 2.14 and that such increased cost
has been attributed on a reasonable basis among similar credits of such
Noteholder, provided, however, that if a Noteholder fails to give such notice
-------- -------
within such period, that Noteholder shall, with respect to compensation payable
pursuant to Section 2.14 (a) or (b) in respect of any costs resulting from such
event, only be entitled to payment under Section 2.14(a) or (b) for costs
incurred from and after the date which is 60 days prior to the date that the
Noteholder does give such notice.
(d) Upon the receipt of any notice of Increased Cost, a Noteholder and
the Lessee shall consult in good faith and such Noteholder shall use its
commercially reasonable efforts to avoid or mitigate the amount of any Increased
Cost, including without limitation, by assigning the rights and obligations of
such Noteholder hereunder to another office, branch, subsidiary or affiliate of
the Noteholder or by selling or transferring the rights, interests and
obligations of such Noteholder hereunder or under any other Operative Agreement
to another bank, financial or lending institution, subject to the terms hereof,
that would not be subject to any such Increased Cost, provided that such
Noteholder shall not be required to take such action to avoid or mitigate such
Increased Cost hereunder if such action would result in any economic, legal or
regulatory disadvantage, or any
15
adverse tax consequence to such Noteholder (other than (i) economic disadvantage
for which the Lessee agrees to indemnify such Noteholder on an After Tax Basis
and in a manner reasonably acceptable to such Noteholder, or (ii) adverse tax
consequences for which the Lessee agrees to indemnify such Noteholder on an
After Tax Basis and in a manner reasonably acceptable to such Noteholder).
(e) The Owner Trustee shall not be required to make payments under
this Section to any Noteholder if (i) a claim hereunder arises through
circumstances peculiar to such Noteholder and which do not affect commercial
lenders in the same jurisdiction generally, (ii) the claim arises out of a
voluntary relocation by such Noteholder of its lending office and (iii) such
Noteholder is not also seeking indemnification against similar increased costs,
to the extent it is entitled to do so, in comparable transactions (it being
agreed that an Officer's Certificate to the contrary shall be conclusive
evidence of that fact).
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution. (a) Except as otherwise
-----------------------
provided in Section 3.03, each installment of Basic Rent, any payment of
interest payable on any Payment Date or on overdue installments of Basic Rent
and any payment received by the Indenture Trustee as contemplated by Section
4.03 shall be promptly distributed in the following order of priority:
first, so much of such installment or payment as shall be required to
-----
pay in full the aggregate amount of the payment or payments of principal
and interest and other amounts (as well as any interest on overdue
principal and, to the extent permitted by law, on interest and other
amounts) then due on or in respect of the Equipment Notes shall be
distributed to the holders thereof ratably, without priority of any one
Equipment Note over any other Equipment Note, in the proportion that the
amount of such payment or payments then due under each Equipment Note bears
to the aggregate amount of the payments then due under all Equipment Notes;
second, the balance, if any, of such installment or payment remaining
------
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement; provided, however, that if an Indenture
-------- -------
Event of Default shall have occurred and be continuing, then such balance
shall not be distributed as provided in this clause "second" but shall be
------
held by the Indenture Trustee as part of the Indenture Estate until
whichever of the following shall first occur: (i) all Indenture Events of
Default shall have been cured or waived, in which event such balance shall,
to the extent not theretofore distributed as provided herein, be
distributed as provided in this clause "second", or (ii) Section 3.02 or
------
Section 3.03 shall be applicable, in which event such balance shall be
distributed in accordance with the provisions of said Section 3.02 or
Section 3.03, as the case may be, or
16
(iii) such installment or payment shall have been held for a period in
excess of 185 days, in which event such balance shall, to the extent not
theretofore applied as provided herein, be distributed as provided in this
clause "second" disregarding this proviso.
------
(b) Except as otherwise provided in Section 3.03, if (i) as a result
of any failure by the Lessee to pay Basic Rent in full on any date when an
installment of Basic Rent is due, or (ii) for any other reason there shall not
have been distributed in full on any Basic Rent Payment Date the amounts
described in clause "first" of Section 3.01(a), the Indenture Trustee shall, if
-----
so requested by a Majority in Interest of Noteholders, distribute other payments
of the character referred to in Section 3.04(b) then held by it or thereafter
received by it, to the holders of all Equipment Notes to the extent necessary to
enable the Indenture Trustee to satisfy in full the amounts described in such
clause "first."
-----
SECTION 3.02. Lease Termination, Event of Loss and Replacement. (a)
------------------------------------------------
Except as otherwise provided in Section 3.03, any payment received by the
Indenture Trustee as a result of any payment or prepayment described in Section
2.10, shall be applied to prepayment of the Equipment Notes and to all other
amounts payable thereunder or hereunder or under the other Operative Agreements
as provided in Section 2.10 by applying such funds in the following order of
priority: first, so much of such payment as shall be necessary to reimburse the
-----
Indenture Trustee for any reasonable costs or expenses incurred in connection
with such prepayment shall be paid to the Indenture Trustee; second, so much of
------
such payment as shall be necessary to pay all amounts then due to the holders of
the Equipment Notes pursuant to Section 2.10 shall be distributed to such
holders, ratably, without priority of any one Equipment Note holder over any
other such holder; and third, the balance, if any of such payment remaining
-----
thereafter shall be distributed in the manner set forth in clause "eighth" of
------
Section 3.03(a). With respect to any payment received as a result of the
occurrence of an Event of Loss with respect to the Airframe or any Engine, if a
Replacement Airframe or Replacement Engine shall be substituted for the Airframe
or Engine subject to such Event of Loss as provided in Section 8(a)(i) of the
Lease and Section 5.06, any proceeds of the Aircraft (or related insurance or
requisition proceeds or payment from any governmental authority) which result
from such Event of Loss and are paid to the Indenture Trustee shall be held by
the Indenture Trustee as part of the Indenture Estate as security for the
obligations of the Lessee under the Operative Agreements and invested in
accordance with the terms of Section 3.07, and, unless otherwise applied in
accordance with the terms hereof, such proceeds (and such investment earnings)
shall, to the extent payable to the Lessee under the Lease, be released to the
Lessee at the Owner Trustee's written request upon the release of such damaged
Airframe or Engine and the replacement thereof as herein provided.
(b) Except as otherwise provided in Section 3.03, any amounts received
directly or indirectly from any governmental authority, insurer or other party
pursuant to any provision of Section 8 or 9 of the Lease or otherwise as the
result of loss or damage not constituting such an Event of Loss with respect to
the Airframe or any Engine, or as a result of such loss or damage constituting
such an Event of Loss if and to the extent that such amounts would at the time
be required to be paid to the Lessee pursuant to said Section 8 or 9 but for the
fact that a Specified
17
Default or Event of Default shall have occurred and be continuing, shall be held
by the Indenture Trustee, as security for the obligations of the Lessee under
the Operative Agreements and shall be invested in accordance with the terms of
Section 3.07 and at such time as the conditions for payment to the Lessee
specified in said Section 8 or 9 shall be fulfilled and there shall not be
continuing any Specified Default or Event of Default, such amount, and the
proceeds of any investment thereof, shall, to the extent not applied to such
obligations of the Lessee, be paid to the Lessee to the extent provided in the
Lease.
SECTION 3.03. Payment After Indenture Event of Default, etc. (a)
----------------------------------------------
Except as otherwise provided in Sections 3.04(c) and 3.05(ii), all payments
received and amounts held or realized by the Indenture Trustee after an
Indenture Event of Default shall have occurred and so long as such Indenture
Event of Default shall be continuing and after either (i) the Indenture Trustee
shall foreclose the Lien of this Indenture or shall be pursuing remedies in
respect thereof or (ii) after the Equipment Notes shall have become due and
payable as provided in Section 4.04(b) or (c), as well as all payments or
amounts then held by the Indenture Trustee as part of the Indenture Estate,
shall be promptly distributed by the Indenture Trustee in the following order of
priority:
first, so much of such payments or amounts as shall be required to
-----
reimburse the Indenture Trustee for any tax, fees, expense, charge or other
loss (including, without limitation, all amounts expended or incurred at
the expense of, or charged upon the tolls, rents, revenues, issues, income,
products and profits of, the property included in the Indenture Estate
pursuant to Section 4.05(b)) incurred by the Indenture Trustee (to the
extent reimbursable pursuant to the terms of this Indenture and not
previously reimbursed) (including, without limitation, the expenses of any
sale, taking or other proceeding, reasonable attorneys' fees and expenses,
court costs, and any other expenditures incurred or expenditures or
advances made by the Indenture Trustee in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by the
Indenture Trustee, liquidated or otherwise, upon such Indenture Event of
Default) shall be applied by the Indenture Trustee in reimbursement of such
expenses;
second, so much of such payments or amounts remaining as shall be
------
required to reimburse the holders of the Equipment Notes in full for
payments made pursuant to Section 5.03 (to the extent not previously
reimbursed) shall be distributed to such holders, and if the aggregate
amount remaining shall be insufficient to reimburse all such payments in
full, it shall be distributed ratably, without priority of any Equipment
Note over any other, in the proportion that the aggregate amount of the
unreimbursed payments made by each such holder of Equipment Notes pursuant
to Section 5.03 bears to the aggregate amount of the unreimbursed payments
made by all holders of Equipment Notes pursuant to Section 5.03;
third, so much of such payments or amounts remaining as shall be
-----
required to pay in full to the holders of Equipment Notes any LIBOR Break
Amount and all other amounts payable pursuant to the indemnification
provisions of Article 6 or 7 of the Participation Agreement or pursuant to
any other provision of any Operative Agreement and secured
18
hereunder (other than amounts payable pursuant to clause "second",
------
"fourth", "fifth" or "seventh" of this Section 3.03(a)) to the holders of
------ ----- -------
Equipment Notes and remaining unpaid shall be distributed to such holders,
and if the aggregate amount remaining shall be insufficient to pay all such
amounts in full, it shall be distributed ratably, without priority of any
Equipment Note over any other, in the proportion that the aggregate amount
due each holder of Equipment Notes under this clause "third" bears to the
-----
aggregate amount due all holders of Equipment Notes under this clause
"third";
-----
fourth, so much of such payments or amounts remaining as shall be
------
required to pay to each Noteholder Swap Breakage Loss payable up to an
aggregate amount of Swap Breakage Loss not to exceed the Breakage
Percentage of the aggregate outstanding principal amount of the Equipment
Notes, and if the aggregate amount remaining so to be distributed shall be
insufficient to pay such Breakage Percentage of the Swap Breakage Loss in
full, it shall be distributed ratably, without priority of any Noteholder
over any other Noteholder in the proportion that the aggregate amount due
each Noteholder under this clause "fourth" bears to the aggregate amount
------
due all such Noteholders under this clause "fourth"; provided that, if an
------
Indenture Event of Default described in any of Sections 4.02(b) through (k)
that is not and does not result from or arise out of a Default or an Event
of Default shall have occurred and be continuing, the amount distributed
pursuant to this clause "fourth" shall be the full aggregate amount of the
------
Swap Breakage Loss;
fifth, so much of such payments or amounts remaining as shall be
-----
required to pay in full the aggregate unpaid principal amount of, and all
accrued but unpaid interest to the date of distribution on, the Equipment
Notes shall be distributed to the Noteholders of the Equipment Notes, and
if the aggregate amount remaining shall be insufficient to pay all such
amounts in full, it shall be distributed ratably, without priority of any
one of the Equipment Notes over any other, in the proportion that the
unpaid principal amount of, and all accrued but unpaid interest to the date
of distribution on, such Equipment Note bears to the aggregate unpaid
principal amount of and all accrued but unpaid interest to the date of
distribution on all Equipment Notes;
sixth, so much of such payments or amounts remaining as shall be
-----
required to pay in full the Special Equity Amount (as defined in Section
3.03(c)) determined as of the date of distribution pursuant to this clause
"sixth" shall be distributed to the Owner Trustee for distribution pursuant
-----
to the Trust Agreement;
seventh, so much of such payments or amounts remaining as shall be
-------
required to pay to each Noteholder all the Swap Breakage Loss not
theretofore paid pursuant to clause "fourth" of this Section 3.03(a) and if
the aggregate amount so to be distributed shall be insufficient to pay all
such Swap Breakage Loss in full, it shall be distributed ratably, without
priority of any Noteholder over any other Noteholder in the proportion that
the aggregate amount due each Noteholder under this clause "seventh" bears
-------
to the aggregate amount due all such Noteholders under this clause
"seventh"; and
-------
19
eighth, the balance, if any, of such payments or amounts remaining
------
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
(b) All payments received and all amounts held or realized by the
Indenture Trustee which represent Swap Breakage Gains and which were so
received, held or realized after an Indenture Event of Default shall have
occurred and so long as either (i) the Indenture Trustee shall foreclose the
Lien of this Indenture or shall be pursuing remedies in respect thereof or (ii)
after the Equipment Notes shall have become due and payable as provided in
Section 4.04(b) or 4.04(c) hereof, shall (to the extent not already so
distributed pursuant to subsection (a) of this Section 3.03) be promptly
distributed by the Indenture Trustee in the following order of priority:
first, as provided in clause "first" of Section 3.03(a);
----- -----
second, as provided in clause "second" of Section 3.03(a);
------ ------
third, as provided in clause "third" of Section 3.03(a);
----- -----
fourth, as provided in clause "fifth" of Section 3.03(a);
------ -----
fifth, so long as no Indenture Event of Default shall have occurred
-----
and be continuing that is not and does not result from or arise out of a
Default or an Event of Default, so much of such payments or amounts
remaining as shall be required to pay to the Owner Trustee for distribution
pursuant to the Trust Agreement an amount equal to the Breakage Percentage
of the aggregate outstanding principal amount of the Equipment Notes shall
be distributed to the Owner Trustee for distribution pursuant to the Trust
Agreement; provided that if this clause "fifth" is not applicable, the
-----
distribution of such payments or amounts shall be applied as provided in
clause "sixth" of this Section 3.03(b); and
-----
sixth, the balance, if any, of such payments or amounts remaining
-----
thereafter shall be distributed to the Noteholders ratably, without
priority of any such Noteholder over any other Noteholder, in the
proportion that the aggregate of all amounts due under all Equipment Notes
held by each such Noteholder bears to the aggregate of all amounts due
under all Equipment Notes.
(c) The term "Special Equity Amount" means, as of any date of
---------------------
determination, an amount equal to the sum of (i) Lessor's Cost multiplied by the
percentage set forth in Exhibit G to the Lease opposite the Termination Date
next preceding the date that the Equipment Notes become due and payable pursuant
to Section 4.04(b) or 4.04(c) hereof (or if the date that the Equipment Notes
become so due and payable is a Termination Date, such Termination Date), plus
----
(ii) interest on the amount specified in the foregoing clause (i) at the
Applicable Rate from the Termination Date used to determine the amount specified
in the foregoing clause (i) to the date that the Equipment Notes become so due
and payable and at the Past Due Rate from the date that the Equipment Notes
become so due and payable to the date of distribution pursuant to clause "sixth"
-----
20
of Section 3.03(a) hereof, plus (iii) with respect to each Payment Date
----
occurring on or prior to the Termination Date used to determine the amount
specified in the foregoing clause (i), the portion of the amount of Basic Rent
due on such Payment Date in excess of the aggregate amount of principal and
interest scheduled to have been paid on the Equipment Notes on such Payment Date
(without regard to the acceleration of the Equipment Notes), but only to the
extent such portion was not therefore distributed by the Indenture Trustee to
the Owner Trustee for distribution to the Owner Participant under the Trust
Agreement, plus (iv) with respect to each Payment Date referred to in the
----
foregoing clause (iii), to the extent any portion of Basic Rent due on such
Payment Date is included in the "Special Equity Amount" by operation of the
foregoing clause (iii), interest on such portion at the Past Due Rate from such
Payment Date to the date of distribution pursuant to clause "sixth" of Section
-----
3.03(a).
SECTION 3.05 Certain Payments. (a) Except as otherwise provided in
----------------
this Indenture, any payments received by the Indenture Trustee for which
provision as to the application thereof is made in the Lease or the
Participation Agreement shall be applied forthwith to the purpose for which such
payment was made in accordance with the terms thereof.
(b) Except as otherwise provided in Section 3.01(b), Section 3.02(a)
or Section 3.03, the Indenture Trustee will distribute, promptly upon receipt,
any indemnity payment or payment of damages received by it from the Owner
Trustee, the Trust Company, the Lessee or the Owner Participant in respect of
the Indenture Trustee in its individual capacity or any Noteholder either
pursuant to Article 6 or 7 of the Participation Agreement or as Supplemental
Rent or otherwise, directly to the Person entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Indenture, any sums received by the Indenture Trustee which constitute Excluded
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto.
SECTION 3.05 Other Payments. Any payments received by the Indenture
--------------
Trustee whose purpose or intended payee is not identified shall be held by the
Indenture Trustee pending identification of the intended purpose of such
payment, and thereafter, such payments shall be made for the intended purpose or
to the intended payee or, if no provision as to the application thereof is made
in this Indenture, shall be distributed by the Indenture Trustee (i) to the
extent received or realized at any time prior to the payment in full of all
obligations to the Noteholders secured by the Lien of this Indenture, in the
order of priority specified in Section 3.01 subject to the proviso thereto, and
(ii) to the extent received or realized at any time after payment in full of all
Secured Obligations, in the following order of priority: first, in the manner
-----
provided in clause "first" of Section 3.03(a) and second, in the manner provided
----- ------
in clause "eighth" of Section 3.03(a).
------
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
-------------------------
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of funds of the type received by the Indenture
Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Indenture
21
Trustee from time to time. The Owner Trustee hereby notifies the Indenture
Trustee that unless and until the Indenture Trustee receives notice to the
contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "second" of Section 3.01(a), clause "sixth" or
------ -----
"eighth" of Section 3.03(a) and clause "fifth" of Section 3.03(b) shall be
------ -----
distributed by wire transfer of funds of the type received by the Indenture
Trustee to the account designated on Schedule II to the Participant Agreement
under the heading "Owner Participant" or to such other account as the Owner
Participant may specify from time to time by notice to the Indenture Trustee.
SECTION 3.07 Investment of Amounts Held by Indenture Trustee. Any
-----------------------------------------------
amounts held by the Indenture Trustee pursuant to the proviso set forth in
clause "second" of Section 3.01(a), pursuant to Section 3.02, pursuant to the
------
second proviso to the fourth sentence of Section 4.03 or pursuant to any
provision of any other Operative Agreement providing for amounts to be held by
the Indenture Trustee shall be invested by the Indenture Trustee from time to
time in investments permitted pursuant to Section 15 of the Lease as directed in
writing by the Owner Trustee or, in the event the Owner Trustee shall not so
specify, as directed in writing by the Lessee. Unless otherwise expressly
provided in this Indenture, any income realized as a result of any such
investment, net of the Indenture Trustee's reasonable fees and expenses in
making such investment, shall be held and applied by the Indenture Trustee in
the same manner as the principal amount of such investment is to be applied and
any losses, net of earnings and such reasonable fees and expenses, shall be
charged against the principal amount invested. The Indenture Trustee shall not
be liable for any loss resulting from any investment required to be made by it
under this Indenture other than by reason of its willful misconduct or gross
negligence or any negligence in the handling or application of funds, and any
such investment may be sold (without regard to its maturity) by the Indenture
Trustee without instructions whenever the Indenture Trustee reasonably believes
such sale is necessary to make a distribution required by this Indenture.
SECTION 3.08 Taxes; Withholding. The Indenture Trustee agrees, to the
------------------
extent required by applicable law, to withhold from each payment due hereunder
or under any Equipment Note, United States federal withholding Taxes at the
appropriate rate, and, on a timely basis, to deposit such amounts with an
authorized depository and make such filings and other reports in connection
therewith, and in the manner required under applicable law. The Indenture
Trustee shall promptly furnish to each Noteholder that is a Non-U.S. Person (but
in no event later than the date 30 days after the due date thereof) a U.S.
Treasury Form 1042-S (or similar forms as at any relevant time in effect), if
applicable, indicating payment in full of any Taxes withheld from any payments
by the Indenture Trustee to such persons together with all such other
information and documents reasonably requested by the Noteholder and necessary
or appropriate to enable each Noteholder to substantiate a claim for credit or
deduction with respect thereto for income tax purposes of the country where each
Noteholder is located. In the case of a Noteholder that is a Non-U.S. Person,
the Noteholder shall provide the Indenture Trustee with such forms and other
documentation (collectively, "Tax Forms") as may be necessary or desirable to
enable such Noteholder to claim an exemption from, or reduced rate of, such
Taxes and provided that such Noteholder has furnished the Indenture Trustee with
such Tax Forms and has not notified the Indenture Trustee of the withdrawal or
inaccuracy of any Tax Forms prior to the date of each interest payment, only the
reduced amount
22
(if any) required by applicable law or treaty shall be withheld from payments
under the Equipment Notes held by such Noteholder. If a Noteholder that is a
Non-U.S. Person has furnished to the Indenture Trustee either (x) a properly
completed and currently effective U.S. Treasury Form W-8BEN (or such successor
forms as may be required by the United States Treasury Department) establishing
a complete exemption from or a reduced rate of United States federal withholding
Taxes or (y) a properly completed and currently effective U.S. Treasury Form W-
8EC1 (or such successor form as may be required by the United States Treasury
Department) or other certificate or form establishing a complete exemption from
or a reduced rate of United States federal withholding Taxes, in each case
during the calendar year in which the payment is made or in either of the two
preceding calendar years (or such longer or shorter period as may be required by
the United States Treasury Department) and has not notified the Indenture
Trustee of the withdrawal of such Tax Form or certificate prior to the date of
each interest payment, then only the reduced amount (if any) required by
applicable law shall be withheld from payments under the Equipment Notes held by
such Noteholder in respect of United States federal withholding Taxes. In the
case of a Noteholder that is a U.S. Person and that has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Treasury
Form W-9 (or such successor forms as may be required by the United States
Treasury Department), no amount shall be withheld from payments under the
Equipment Notes held by such Noteholder in respect of United States federal
income tax. If any Noteholder has notified the Indenture Trustee that any of the
foregoing forms or certificates is withdrawn or inaccurate, or if the Internal
Revenue Code or the regulations thereunder or the administrative interpretation
thereof are at any time after the date hereof amended to require such
withholding of United States federal income taxes from payments under the
Equipment Notes held by such Noteholder, or if such withholding is otherwise
required, the Indenture Trustee agrees to withhold from each payment due to the
relevant Noteholder withholding taxes at the appropriate rate under applicable
law, and will, as more fully provided above, on a timely basis, deposit such
amounts with an authorized depository and make such reports, filings and other
reports in connection therewith, and in the manner required under applicable
law.
ARTICLE IV
COVENANTS; EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of the Trust Company and the Owner Trustee.
----------------------------------------------------
The Owner Trustee hereby covenants and agrees (the covenants and agreements in
clause (a) below being made by the Owner Trustee in its individual capacity
only) as follows:
(a) in the event a Responsible Officer of the Owner Trustee shall
have actual knowledge of an Indenture Event of Default or an Event of Loss,
the Owner Trustee will give prompt written notice of such Indenture Event
of Default or Event of Loss to the Indenture Trustee, the Lessee, the Owner
Participant and each Noteholder;
23
(b) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and other
instruments furnished to the Owner Trustee under the Lease, including,
without limitation, a copy of each report or notice received pursuant to
Section 9(g) of the Lease, to the extent that the Operative Agreements do
not provide that the same shall be furnished directly to such Noteholder or
the Indenture Trustee;
(c) the Owner Trustee will not (except as permitted herein)
assign or pledge or otherwise dispose of, so long as this Indenture shall
remain in effect and shall not have been terminated pursuant to Section
9.01, any of its right, title or interest hereby assigned to anyone other
than the Indenture Trustee, and, with respect to such right, title and
interest hereby assigned, will not, except in respect of Excluded Payments
or otherwise as provided in this Indenture or the Participation Agreement,
(1) accept any payment from the Lessee or any Permitted Sublessee, enter
into any agreement amending or supplementing any of the Indenture
Documents, execute any waiver or modification of, or consent under, the
terms of any of the Indenture Documents, (2) exercise any rights with
respect to the Indenture Estate, (3) settle or compromise any claim arising
under any of the Indenture Documents, or (4) submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any of the Indenture Documents to arbitration thereunder; and
(d) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Operative Agreements and, except as contemplated by the
Operative Agreements, will not contract for, create, incur or assume any
indebtedness or guarantee, endorse or otherwise become contingently liable
in connection with the indebtedness of any other person.
SECTION 4.02. Indenture Event of Default. "Indenture Event of
-------------------------- ------------------
Default" means any of the following events (whatever the reason for such
-------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administration or governmental body) and each such
Indenture Event of Default shall continue so long as, but only so long as, it
shall not have been remedied:
(a) any Event of Default; or
(b) the failure (other than by reason of a Default or Event of
Default) of the Owner Trustee to pay to the Indenture Trustee when due any
payment of principal of, or interest on, any Equipment Note and such
failure shall have continued unremedied for 5 Business Days, or the failure
(other than by reason of a Default or Event of Default) of the Owner
Trustee to pay to the Indenture Trustee when due any other amount due and
payable by the Owner Trustee to the Indenture Trustee or any Noteholder
hereunder, under any
24
Equipment Note or under any other Operative Agreement, and such failure
shall have continued unremedied for 10 Business days after receipt by the
Owner Trustee and the Owner Participant of written notice thereof from the
Indenture Trustee or the Majority in Interest of Noteholders; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 5.03(b) of the Participation Agreement or
required to be discharged by the Owner Participant pursuant to Section
5.01(b) of the Participation Agreement shall remain undischarged for a
period of 30 days after a Responsible Officer of the Trust Company or the
Owner Participant, as the case may be, shall have actual knowledge of such
Lessor's Lien; or
(d) any representation or warranty made by the Owner Trustee or
the Owner Participant or the Trust Company herein or in the Participation
Agreement, or made by any Owner Participant Guarantor in its Owner
Participant Guaranty, shall prove to have been false or incorrect when made
in any material respect to the Noteholders and, but only if such
misrepresentation is capable of being corrected, shall remain uncured and
material for a period of 30 days after notice thereof from the Indenture
Trustee or the Majority in Interest of Noteholders to such Person; or
(e) any failure by the Owner Trustee to observe any of its
covenants in Section 4.01(c) or (d) herein or any failure by the Owner
Participant to observe any of its covenants in Section 5.01(c) or 5.01(e)
of the Participation Agreement or any failure by the Owner Trustee or the
Owner Participant to observe any of its respective covenants in the first
and fourth sentences of Section 5.11 of the Participation Agreement; or
(f) except as provided in paragraph (e) above or paragraph (i) of
this Section 4.02, any failure by the Owner Trustee or the Trust Company to
observe or perform any other covenant or obligation of the Owner Trustee or
the Trust Company, as the case may be, contained in this Indenture or any
failure by the Owner Trustee or the Trust Company to observe or perform any
other covenant or obligation of the Owner Trustee or the Trust Company, as
the case may be, to or for the benefit of any Noteholder or the Indenture
Trustee contained in the Participation Agreement or any failure by the
Owner Participant to observe or perform any other covenant or obligation of
the Owner Participant to or for the benefit of any Noteholder or the
Indenture Trustee contained in the Participation Agreement or any failure
by any Owner Participant Guarantor to perform any covenant or obligation of
such Owner Participant Guarantor to or for the benefit of any Noteholder or
the Indenture Trustee under its Owner Participant Guaranty which, in any
case, is not remedied within a period of 30 calendar days after notice
thereof from the Indenture Trustee or Majority in Interest of Noteholders
has been given to the Owner Trustee, the Trust Company, the Owner
Participant or Owner Participant Guarantor, as the case may be, provided,
--------
however, if there exists no material risk of sale, loss or forfeiture of
-------
the Aircraft or any additional liability to the Indenture Trustee or any
Loan Participant, and if the Owner
25
Trustee, the Trust Company, the Owner Participant or the Owner Participant
Guarantor, as the case may be, shall have undertaken to cure any such
failure and, notwithstanding the reasonable diligence of the Owner Trustee,
the Trust Company, the Owner Participant or the Owner Participant
Guarantor, as the case may be, in attempting to cure such failure, such
failure is not cured within said 30-day period but is curable with future
due diligence, there shall exist no Indenture Event of Default under this
Section 4.02 so long as the Owner Trustee, the Trust Company, the Owner
Participant or the Owner Participant Guarantor, as the case may be, is
proceeding with due diligence to cure such failure and such failure is in
fact cured within 150 days; or
(g) either the Trust Estate or the Owner Trustee (and not in its
individual capacity) or the Owner Participant or any Owner Participant
Guarantor shall (i) be generally not paying its debts as they become due,
(ii) file, or consent by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, (iii) make an assignment for the
benefit of its creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers of itself or of any
substantial part of its property, or (v) take corporate or comparable
action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Trust Estate or the
Owner Trustee (not in its individual capacity) or the Owner Participant or
any Owner Participant Guarantor, a custodian, receiver, trustee or other
officer with similar powers with respect to the Trust Estate or the Owner
Trustee (not in its individual capacity) or the Owner Participant or any
such Owner Participant Guarantor, or with respect to any substantial part
of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Trust Estate or the Owner Trustee (not in its individual capacity)
or the Owner Participant or any such Owner Participant Guarantor, or if any
petition for any such relief shall be filed against the Trust Estate or the
Owner Trustee (not in its individual capacity) or the Owner Participant or
any such Owner Participant Guarantor, and such petition shall not be
dismissed within, or the order shall be unstayed and remain in effect for a
period of, 60 days; or
(i) any failure by the Trust Company to give notice, or to
resign, if required by Section 5.02(b) of the Participation Agreement, or
(if the Trust Company shall have given such notice and resigned as required
by said Section 5.02(b)) a successor Owner Trustee shall not have been
appointed and qualified within 30 days after the Trust Company's ceasing to
be a "Citizen of the United States", unless such failure does not adversely
affect the Lien of this Indenture; or
26
(j) any disaffirmation or repudiation by any Owner Participant
Guarantor of its obligations under its Owner Participant Guaranty.
Notwithstanding any provision of Section 4.02(g) or (h) to the contrary, if the
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation of the Trust Company shall have caused an
Indenture Default or Indenture Event of Default under Section 4.02(g) or (h),
then no such Indenture Default or Indenture Event of Default shall be deemed to
have occurred so long as the Owner Participant is diligently seeking to, and
does replace the Trust Company then serving as Owner Trustee within forty-five
days after the date of such Indenture Default or Indenture Event of Default;
provided, however, the Owner Participant shall not be entitled to cure such an
-------- -------
Indenture Event of Default by replacing the then existing Owner Trustee, if the
Indenture Trustee's rights in the Indenture Estate or any material portion
thereof, in the reasonable judgment of a Majority in Interest of Noteholders,
would be impaired either by such forty-five (45) day delay (or any portion
thereof) or by the Owner Participant's replacing the Owner Trustee.
SECTION 4.03. Certain Cure Rights. Upon an Event of Default in the
-------------------
payment of any installment of Basic Rent due under the Lease, the Owner
Participant may, but shall not be required to, within 5 Business Days after such
Event of Default, without the consent or concurrence of any Noteholder, pay, as
provided in Section 2.04, for application in accordance with Section 3.01 a sum
equal to the amount of all (but not less than all) principal and accrued
interest (including interest, if any, on overdue payments of principal and
interest) then due on the Equipment Notes and payable out of such overdue Basic
Rent. In the event of any default by the Lessee in any obligation under the
Lease other than the payment of Basic Rent, if such default can be remedied by
the payment of money and the Owner Participant shall furnish the Owner Trustee
with all funds necessary for remedying such default, the Owner Participant may,
within 15 Business days after the expiry of the applicable grace period
specified in the Lease with respect to such default, without the consent or
concurrence of any Noteholder, instruct the Owner Trustee to exercise the Owner
Trustee's rights under Section 18 of the Lease to perform such obligation on
behalf of the Lessee. Solely for the purpose of determining whether there exists
an Indenture Event of Default, (a) any timely payment by the Owner Participant
pursuant to, and in compliance with, the first sentence of this Section 4.03
shall be deemed to remedy (but solely for purposes of this Indenture) any
default by the Lessee in the payment of installments of Basic Rent theretofore
due and payable and to remedy (but solely for purposes of this Indenture) any
default by the Owner Trustee in the payment of any amount of principal and
interest due and payable under the Equipment Notes and (b) any timely
performance by the Owner Trustee of any obligation of the Lessee under the Lease
pursuant to, and in compliance with, the second sentence of this Section 4.03
shall be deemed to remedy (but solely for purposes of this Indenture) any Event
of Default to the same extent that like performance by the Lessee itself would
have remedied such Event of Default (but no such remedy shall relieve the Lessee
of its duty to pay all Rent and perform all of its obligations pursuant to the
Lease). If, on the basis specified in the preceding sentence, any Events of
Default shall have been remedied, then any declaration pursuant to this
Indenture that the Equipment Notes are due and payable or that an Indenture
Event of Default exists hereunder, based solely upon such Events of Default,
shall be
27
deemed to be rescinded, and the Owner Participant shall (to the extent of any
such payments made by it) be subrogated to the rights of the holders of the
Equipment Notes under Section 3.01(a), to receive from the Indenture Trustee
such payment of overdue Rent (and the payment of interest on account of such
Rent being overdue) and shall be entitled, so long as all amounts then due and
payable to the Noteholders shall have been paid and no other Indenture Event of
Default shall have occurred and be continuing, to receive, subject to the
provisions of this Indenture: such payment upon receipt thereof by the Indenture
Trustee; provided that the Owner Participant shall not otherwise attempt to
--------
recover any such amount paid by it on behalf of the Lessee pursuant to this
Section 4.03 except by demanding of the Lessee payment of such amount or, so
long as such action is not inconsistent with any remedy then being exercised
against Lessee under or pursuant to the Lease, by commencing an action at law
against the Lessee for the payment of such amount; provided, further, that at no
-------- -------
time while an Indenture Event of Default (other than an Indenture Event of
Default which is a, or arises out of a, Default or Event of Default) shall have
occurred and be continuing shall any such demand be made or shall any such
action be commenced (or continued) and such subrogation shall be subordinate to
the rights of the Indenture Trustee and the Noteholders in respect of such
payment, and during any such period any amounts nevertheless received by the
Owner Participant in respect thereof shall be held in trust for the benefit of,
and promptly paid to, the Indenture Trustee for distribution as provided in
Section 3.03; and further provided that:
------- --------
(x) this Section 4.03 shall not apply with respect to any default in
the payment of Basic Rent due under the Lease if the Lessee itself shall
have theretofore failed to pay Basic Rent in the manner required under the
Lease (after giving effect to any applicable grace period) on (i) each of
the two Basic Rent Payment Dates immediately preceding the date of such
default, or (ii) a total of five Basic Rent Payment Dates (including,
solely for the purposes of this paragraph (x), the Delivery Date as a Basic
Rent Payment Date);
(y) the second sentence of this Section 4.03 shall cease to apply, and
no payment by the Owner Participant in respect of Supplemental Rent or
performance of any obligation of the Lessee under the Lease by the Owner
Trustee shall be deemed to remedy or to have remedied any Event of Default
for the purposes of this Indenture, if during the Term there shall have
been expended by the Owner Participant pursuant to the second sentence of
this Section 4.03 (and which shall have not been reimbursed by the Lessee
itself to the Owner Trustee for distribution to the Owner Participant) an
amount in the aggregate in excess of $1,000,000; and
(z) neither the Owner Trustee nor the Owner Participant shall have the
right to cure any Event of Default except as specified in this Section
4.03.
Except as hereinafter in this Section 4.03 provided during any period prior to
satisfaction of all Secured Obligations, the Owner Trustee shall not, as a
result of exercising the right to remedy any such Event of Default, obtain any
Lien on any of the property included in the Indenture Estate or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against the Lessee or any other party
28
for the repayment of such costs or expenses impair the prior right and security
interest of the Indenture Trustee in and to any of the property in the Indenture
Estate.
SECTION 4.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, consistent
with this Section 4.04(a), exercise any or all of the rights and powers and
pursue any and all of the remedies pursuant to this Article IV and shall have
and may exercise all of the rights and remedies of a secured party under the
Uniform Commercial Code and, in the event such Indenture Event of Default is an
Indenture Event of Default referred to in paragraph (a) of Section 4.02 and
Section 4.03 shall either not apply or shall have ceased to apply with respect
to the relevant Event of Default, any and all of the remedies pursuant to
Section 17 of the Lease and all of the rights and remedies of a lessor under
applicable law and may take possession of all or any part of the properties
covered or intended to be covered by the Lien and security interest created
hereby or pursuant hereto and may exclude the Owner Participant, the Owner
Trustee and the Lessee and all persons claiming under any of them wholly or
partly therefrom. The Indenture Trustee agrees to give the Owner Trustee at
least 10 days' written notice of the date fixed for any public sale of the
Indenture Estate or of the date on or after which will occur the execution of
any contract providing for any private sale of the Indenture Estate (which
notice the parties hereto agree shall constitute commercially reasonable notice
under applicable law). At any sale of the Indenture Estate or any part thereof,
the Owner Trustee or the Owner Participant may bid for and purchase such
property. Without limiting any of the foregoing, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale. It is further
understood and agreed that if the Indenture Trustee shall proceed to foreclose
the Lien of this Indenture in respect of an Indenture Event of Default referred
to in paragraph (a) of Section 4.02, it shall, to the extent that it is then
entitled to do so hereunder and under the Lease, and is not then stayed or
prevented from doing so by operation of law or otherwise, proceed (to the extent
it has not already done so) to exercise one or more of the remedies referred to
in Section 17(a), (b), (c), (d) or (e) of the Lease (to the extent that any such
remedy referred to in Section 17(e)(ii) is comparable to any remedy referred to
in such Section 17(a) , (b) , (c) , (d) or (e)(i) of the Lease) as it shall
determine in its sole good faith discretion or as it shall be directed by a
Majority in Interest of the Noteholders; provided that, if the Indenture Trustee
--------
is so stayed or prevented, it will not be entitled to proceed to foreclose the
Lien of this Indenture until the earlier of (x) actual repossession of the
Aircraft from the Lessee or the Owner Trustee, as the case may be, or (y) the
expiration of the Section 1110 Period (as hereafter defined); and for the
avoidance of doubt, it is expressly understood and agreed that, subject to the
immediately preceding proviso and to the immediately following proviso, the
above-described inability of the Indenture Trustee to exercise any right or
remedy under the Lease shall in no event and under no circumstance prevent the
Indenture Trustee from exercising all of its rights, powers and remedies under
this Indenture, including without limitation this Article IV; provided, further,
-------- --------
that the Indenture Trustee shall not foreclose upon or divest the Owner Trustee
of title to the Aircraft or the Lease in the event the Lessee (or the bankruptcy
trustee or debtor-in-possession) with the approval of the relevant court agrees
to perform the Lease in accordance with Section 1110 of the Bankruptcy Code but
only so long as the
29
Lessee (or the bankruptcy trustee or debtor-in-possession) is in compliance with
the provisions of such agreement under Section 1110 of the Bankruptcy Code in
all respects. For purposes of this Section 4.04(a), the term "Section 1110
Period" means the 60-day period from the date of the order for relief under
Chapter 11 of the Bankruptcy Code (or such longer period as then may be in
effect under Section 1110 of the Bankruptcy Code, including for this purpose any
extension of such period by the Indenture Trustee (as assignee of the Owner
Trustee) and the bankruptcy trustee or debtor-in-possession pursuant to Section
1110(b) thereof).
(b) If an Indenture Event of Default referred to in clause (g) or (h)
of Section 4.02 shall have occurred, then and in every such case the unpaid
principal of all Equipment Notes then outstanding, together with interest
accrued but unpaid thereon, Breakage Cost, if any, and all other amounts due to
the holders of the Equipment Notes thereunder, hereunder and under the other
Operative Agreements, shall, unless the Indenture Trustee acting upon the
instructions of the Majority in Interest of Noteholders shall otherwise direct,
immediately and without further act become due and payable, without presentment,
demand, protest or notice, all of which are hereby waived.
(c) If any other Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee may at any time,
by written notice or notices to the Owner Trustee, declare all the Equipment
Notes to be due and payable, whereupon the unpaid principal of all Equipment
Notes then outstanding, together with accrued but unpaid interest thereon,
Breakage Cost, if any, and all other amounts due to the holders of the Equipment
Notes thereunder, hereunder and under the other Operative Agreements, shall
immediately and without further act become due and payable without presentment,
demand, protest or other notice, all of which are hereby waived.
(d) Each Noteholder shall be entitled, at any sale pursuant to Section
17(b) of the Lease or this Article IV, to credit against any purchase price bid
at such sale by such Noteholder all or any part of the unpaid obligations owing
to such Noteholder and secured by the Lien of this Indenture. The Indenture
Trustee and the Noteholders shall, upon any such purchase, acquire good title to
the property so purchased, to the extent permitted by applicable law, free of
all rights of redemption.
SECTION 4.05. Return of Aircraft, etc. (a) If an Indenture Event of
------------------------
Default shall have occurred and be continuing, subject to Section 4.03 and
Section 4.04(a) , at the request of the Indenture Trustee the Owner Trustee
shall promptly execute and deliver to the Indenture Trustee such instruments of
title and other documents as the Indenture Trustee may deem necessary or
advisable to enable the Indenture Trustee or an agent or representative
designated by the Indenture Trustee, at such time or times and place or places
as the Indenture Trustee may specify, to obtain possession of all or any part of
the Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If the Owner Trustee shall for any reason fail to execute
and deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and
30
requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents, and (ii) pursue all or part of the
Indenture Estate wherever such Indenture Estate may be found and may enter any
of the premises of the Lessee wherever it may be or be supposed to be and search
for and take possession of and remove the same. All expenses of obtaining such
judgment or of pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession and during the continuance of
an Indenture Event of Default, the Indenture Trustee may, from time to time, at
the expense of the Indenture Estate, make all such reasonable expenditures for
maintenance, insurance, repairs, replacements, alterations, additions and
improvements to and of the Indenture Estate, as it may deem proper. In each such
case, the Indenture Trustee shall have the right to maintain, use, operate,
store, lease, control or manage the Indenture Estate and to carry on the
business and, without limiting the express provisions of Section 5.09, to
exercise all rights and powers of the Owner Participant and the Owner Trustee
relating to the Indenture Estate, as the Indenture Trustee shall deem best,
including the right to enter into any and all such agreements with respect to
the maintenance, insurance, use, operation, storage, leasing, control,
management or disposition of the Indenture Estate or any part thereof as the
Indenture Trustee may determine; and except for Excluded Payments, the Indenture
Trustee shall be entitled to collect and receive directly all tolls, rents
(including Rent), revenues, issues, income, products and profits of the
Indenture Estate and every part thereof. Such tolls, rents (including Rent),
revenues, issues, income, products and profits shall be applied to pay the
reasonable expenses of the use, operation, storage, leasing, control, management
or disposition of the Indenture Estate and of conducting the business thereof,
and of all maintenance, repairs, replacements, alterations, additions and
improvements, and to make all payments which the Indenture Trustee may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trustee), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Indenture, as well as just and reasonable compensation for
the services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee.
SECTION 4.06. Remedies Cumulative. Subject to Sections 4.03, 4.04(a),
-------------------
4.08 and 5.09, each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Indenture shall be cumulative and
shall be in addition to every other right, power and remedy herein specifically
given or now or hereafter existing at law, in equity or by statute, and each and
every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by the Indenture Trustee, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right, remedy or power or in the pursuit of any remedy shall impair any
such right, power or remedy or be
31
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trustee, the Indenture Trustee and the Lessee shall, subject to
any determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Indenture Estate, and all rights, remedies
and powers of the Indenture Trustee shall continue as if no such proceedings had
been instituted.
SECTION 4.08. Waiver of Past Defaults. Upon written instructions from
-----------------------
a Majority in Interest of Noteholders, the Indenture Trustee shall waive any
past Indenture Default or Indenture Event of Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other Indenture Default or Indenture Event of Default or impair
any right consequent thereon; provided, however, that in the absence of written
-------- -------
instructions from all Noteholders, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the principal of, or interest on, or
other amounts due under, any Equipment Note then outstanding, or (ii) in respect
of a covenant or provision hereof which, under the proviso to the first sentence
of Section 8.01 or under the last sentence of Section 8.01, cannot be waived
without the consent of each Noteholder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notices. (a) Notice of Indenture Event of Default. In
------- ------------------------------------
the event a Responsible Officer of the Indenture Trustee shall have actual
knowledge of an Indenture Event of Default or of an Indenture Default arising
from a failure to pay Basic Rent, the Indenture Trustee shall forthwith give
prompt written notice by telex or facsimile thereof to the Owner Trustee, the
Owner Participant, the Lessee and the Noteholders. Subject to the terms of
Sections 4.03, 4.04(a), 4.08, 5.03 and 5.09, the Indenture Trustee shall take
such action, or refrain from taking such action, with respect to any such
Indenture Event of Default (including with respect to the exercise of any rights
or remedies hereunder) as the Indenture Trustee shall be instructed in writing
by the Majority in Interest of Noteholders. Subject to the provisions of
Sections 4.03, 4.04(a), 4.08, 5.03 and 5.09, if the Indenture Trustee shall not
have received instructions as above provided within twenty (20) calendar days
after receipt of notice of such Indenture Event of Default by the Noteholders,
the Indenture Trustee may, subject to instructions thereafter received pursuant
to the preceding provisions of this Section 5.01, take such action, or refrain
from taking such action, but shall be under no duty to take or refrain from
taking any action, with respect to any such Indenture Event of Default as it
shall determine advisable in the best interests of the Noteholders and shall use
the same
32
degree of care and skill in connection therewith as a prudent person would use
under the circumstances in the conduct of such person's own affairs; provided
--------
that the Indenture Trustee may not sell the Airframe or any Engine without the
consent of the Majority in Interest of Noteholders. In the event the Indenture
Trustee shall at any time commence to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify the Noteholders, the
Owner Trustee, the Owner Participant and the Lessee. For all purposes of this
Indenture, in the absence of actual knowledge on the part of a Responsible
Officer in its Corporate Trust Department, in the case of the Indenture Trustee,
or its Corporate Trust Administration, in the case of the Owner Trustee, the
Indenture Trustee or the Owner Trustee, as the case may be, shall not be deemed
to have knowledge of any Indenture Default, any Default or any Event of Default
(except, in the case of the Indenture Trustee, the failure of the Lessee to pay
any installment of Basic Rent when due, which failure shall constitute knowledge
of an Indenture Default) unless notified in writing by the Lessee, the Owner
Trustee or one or more Noteholders. This Section 5.01, however, is subject to
the condition that, if at any time after the principal of the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) and before
any judgment or decree for the payment of the money so due, or any thereof,
shall be entered, all overdue payments of interest upon the Equipment Notes and
all other amounts payable under the Equipment Notes (except the principal of the
Equipment Notes which by such declaration shall have become payable) shall have
been duly paid, and every other Indenture Default and Indenture Event of Default
with respect to any covenant or provision of this Indenture shall have been
cured, then and in every such case a Majority in Interest of Noteholders may
(but shall not be obligated to), by written instrument filed with the Indenture
Trustee, rescind and annul such acceleration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
(b) Other Notices. The Indenture Trustee will furnish to each
-------------
Noteholder promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and other
instruments furnished to the Indenture Trustee under any Operative Agreement or
received from the Owner Trustee pursuant to Section 4.01(b) to the extent the
same shall not have been otherwise directly distributed to the Noteholders
pursuant to the express provision of any other Operative Agreement.
SECTION 5.02. Action Upon Instructions. (a) Subject to the terms of
------------------------
Sections 4.03, 4.04(a), 4.08, 5.01, 5.03 and 5.09, upon the written instructions
at any time and from time to time of a Majority in Interest of Noteholders, the
Indenture Trustee shall take such of the following actions as may be specified
in such instructions: (i) exercise such election or option, or make such
decision or determination, or give such notice, consent, waiver or approval or
exercise such right, remedy or power or take such other action hereunder or
under any other Operative Agreement or in respect of any part or all of the
Indenture Estate as shall be specified in such instructions; (ii) take such
action with respect to, or to preserve or protect, the Indenture Estate
(including the discharge of Liens) as shall be specified in such instructions
and as is consistent with this Indenture; and (iii) take such other action in
respect of the subject matter of this Indenture as is consistent with the terms
hereof and the other Indenture Documents. The Indenture Trustee will
33
execute and the Owner Trustee will file or cause to be filed such continuation
statements with respect to financing statements relating to the security
interests created hereunder in the Indenture Estate as may be specified from
time to time in written instructions of a Majority in Interest of Noteholders or
Lessee (which instructions may, by their terms, be operative only at a future
date and which shall be accompanied by the execution form of such continuation
statement so to be filed).
(b) Subject to Sections 4.03, 4.04(a), 4.08, 5.01, 5.03 and 5.09, if
any Event of Default shall have occurred and be continuing, on request of a
Majority in Interest of Noteholders, the Indenture Trustee shall declare the
Lease to be in default and exercise such remedies under Section 17 of the Lease
as shall be specified in such request. The Indenture Trustee agrees to provide
to the Noteholders, the Owner Trustee and the Owner Participant concurrently
with such declaration by the Indenture Trustee, notice of such declaration by
the Indenture Trustee; provided that the failure to give any such notice to such
--------
Noteholders, the Owner Trustee or the Owner Participant shall not affect the
validity of such declaration.
SECTION 5.03. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action under Section 5.01
(other than the first sentence thereof) or 5.02 or Article IV unless the
Indenture Trustee shall have been indemnified by the Noteholders against any
liability, cost or expense (including reasonable counsel fees) which may be
incurred in connection therewith (except for the consequences of the Indenture
Trustee's gross negligence, willful misconduct and, in receiving, handling or
remitting funds only, its failure to use ordinary care). The Indenture Trustee
shall not be under any obligation to take any action under this Indenture and
nothing contained in this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it on the terms provided above. The Indenture Trustee
shall not be required to take any action under Section 5.01 (other than the
first sentence thereof) or 5.02 or Article IV, nor shall any other provision of
this Indenture be deemed to impose a duty on the Indenture Trustee to take any
action, if the Indenture Trustee shall have been advised by counsel that such
action is contrary to the terms hereof or is otherwise contrary to law.
SECTION 5.04. No Duties Except as Specified in Indenture or
---------------------------------------------
Instructions. The Indenture Trustee shall not have any duty or obligation to
------------
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this
Indenture or any part of the Indenture Estate, except as expressly provided by
the terms of this Indenture or as expressly provided in written instructions
from the Noteholders as provided in this Indenture; and no implied duties or
obligations shall be read into this Indenture against the Indenture Trustee. The
Indenture Trustee agrees that it will, in its individual capacity and at its own
cost and expense promptly take such action as may be necessary to duly discharge
all Liens on any part of the Indenture Estate which result from claims against
it in its individual capacity not related to the mortgaging to it of the
Aircraft or the administration of the Indenture Estate or any other transaction
34
contemplated by or pursuant to the Participation Agreement or any document
included in the Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Participation Agreement,
------------------------------------------------------
Indenture or Instructions. The Owner Trustee and the Indenture Trustee agree
-------------------------
that they will not use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with the Aircraft or any other part of the Indenture Estate
except (i) in accordance with the terms of the Lease or the Participation
Agreement, or (ii) in accordance with the powers granted or reserved to, or the
authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant
to this Indenture and in accordance with the express terms hereof. Any breach of
this covenant resulting solely from an Event of Default shall not be an
Indenture Event of Default other than pursuant to Section 4.02(a).
SECTION 5.06. Replacement Airframes and Replacement Engines. At any
---------------------------------------------
time and from time to time, any Airframe or Engine which has been (or is to be
treated as if the same had been) subject to an Event of Loss and may be replaced
under Section 7(e) or 8(a) of the Lease by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 5.06 and the provisions of the applicable Section of the Lease,
and the Owner Trustee shall, from time to time, direct the Indenture Trustee to
execute and deliver to or as directed in writing by the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine, as appropriate,
from the Lien of this Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon receipt by or deposit with
the Indenture Trustee of the following (modified as appropriate if the Airframe
or Engines and/or the Replacement Airframe or Replacement Engines shall not, if
permitted pursuant to the Participation Agreement, be registered in the United
States):
(a) A written request from the Owner Trustee, requesting such release and
specifically describing the Airframe and/or Engine(s) so to be released.
(b) A certificate signed by a duly authorized officer of the Lessee
stating the following:
1. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number and manufacturer's serial
number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number and manufacturer's serial
number) to be received as consideration for the Airframe to be
released;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Airframe the Owner Trustee will be the legal owner of
such Replacement Airframe free and clear of all Liens except Permitted
Liens (excluding for this purpose Lessor's Liens), and that such
Replacement Airframe has been or,
35
substantially concurrently with such replacement, is in the process of
being duly registered in the name of the Owner Trustee under Chapter
441 of the Act and that an airworthiness certificate has been duly
issued under Chapter 447 of the Act with respect to such Replacement
Airframe, and that such registration and certificate is in full force
and effect, and that the Lessee will have the full right and authority
to use such Replacement Airframe;
(iv) that the insurance required by Section 9 of the Lease is
in full force and effect with respect to such Replacement Airframe and
all premiums then due thereon have been paid in full;
(v) that no Specified Default or Event of Default has
occurred and is continuing or would result from the making and
granting of the request for release and the addition of such
Replacement Airframe;
(vi) that the release of the Airframe so to be released will
not impair the security of the Indenture (except in respect of such
release) or be in contravention of any of the provisions of the Lease;
and
(vii) that each of the conditions specified in Section 8(d) of
the Lease with respect to such Replacement Airframe have been
satisfied.
2. With respect to the replacement of any Engine (in addition to the
items required in Section 5.06(b)(1) above):
(viii) a description of the Engine, which shall be identified by
manufacturer's name and serial number;
(ix) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine to be released;
(x) that on the date of the Indenture Supplement relating to
the Replacement Engine, the Owner Trustee will be the legal owner of
such Replacement Engine, free and clear of all Liens except Permitted
Liens (excluding for this purpose Lessor's Liens);
(xi) that the release of the Engine so to be released will not
impair the security of the Indenture (except in respect of such
release) or be in contravention of any of the provisions of the Lease;
and
(xii) that each of the conditions specified in Section 7(e) of
the Lease with respect to such Replacement Engine have been satisfied.
36
(c) The appropriate instruments (i) transferring to the Owner Trustee
title to the Replacement Airframe or Replacement Engine to be received as
consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties generally available with respect to such Replacement Airframe or
Replacement Engine, and an Indenture Supplement subjecting such Replacement
Airframe or Replacement Engine and any related warranty right to the Lien
of this Indenture.
(d) Intentionally Omitted.
(e) The opinion of counsel to the Lessee, reasonably satisfactory to the
Indenture Trustee and the Owner Trustee, stating that:
(1) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be lawfully released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with; and
(2) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the
Lease, the instruments subjecting such Replacement Airframe or
Replacement Engine to the Lease and to the Lien of this Indenture, as
the case may be, have been duly filed for recordation pursuant to the
Act, and no further action, filing or recording of any document is
necessary or advisable in order to establish and perfect the title of
the Owner Trustee to and the Lien of this Indenture on such
Replacement Aircraft or Replacement Engine and, as to any such
Replacement Airframe and associated Replacement Engines, that the
Owner Trustee and the Indenture Trustee, as the assignee of the Owner
Trustee's rights under the Lease, shall be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect thereto to the same
extent as immediately prior to such replacement.
SECTION 5.07. Indenture Supplements for Replacements. In the event of
--------------------------------------
a Replacement Airframe or Replacement Engine being substituted as contemplated
by Section 7(e) or 8(a) of the Lease, the Owner Trustee and the Indenture
Trustee agree for the benefit of the Noteholders and the Lessee, subject to
fulfillment of the conditions precedent and compliance by the Lessee with its
obligations set forth in Section 7(e) or 8(a) of the Lease, to execute and
deliver an Indenture Supplement with respect thereto as contemplated by Section
5.06(c), and, provided no Indenture Default or Indenture Event of Default shall
have occurred and be continuing, to execute and deliver to the Lessee an
appropriate instrument releasing the Airframe or Engine being replaced from the
Lien of this Indenture.
37
SECTION 5.08. Effect of Replacement. In the event of the substitution
---------------------
of a Replacement Airframe as contemplated by Section 8(a) of the Lease or of a
Replacement Engine pursuant to Section 7(e) of the Lease and, in each case,
Section 5.06, all provisions of this Indenture relating to the Airframe or
Engine or Engines being replaced shall be applicable to such Replacement
Airframe or Replacement Engine or Engines with the same force and effect as if
such Replacement Airframe or Replacement Engine or Engines were the same
airframe or engine or engines, as the case may be, as the Airframe or Engine or
Engines being replaced but for the Event of Loss with respect to the Airframe or
Engine or Engines being replaced.
SECTION 5.09. Certain Rights of Owner Trustee and Owner Participant.
-----------------------------------------------------
Notwithstanding any other provision of this Indenture, including the Granting
Clause, or of any other Operative Agreement, the following rights shall be
reserved to the Owner Trustee or the Owner Participant, as the case may be, to
the extent described herein:
(a) to the exclusion of the Indenture Trustee, so long as no
Indenture Event of Default shall have occurred and be continuing, (i)
subject to and without affecting the provisions of the Lease referred to in
clauses (iv) and (v) of the proviso of the first sentence of Section 8.01
hereof, to exercise the rights, elections and options of the Owner Trustee
to make any decision or determination and to give any notice, consent,
waiver or approval with respect to any adjustments of payments or
allocations of Basic Rent, EBO Amount and Termination Value under Section
3(d) of the Lease (and the corresponding adjustments to the percentages set
forth in Exhibit D to the Lease as contemplated by the last sentence of
Section 3(d) of the Lease) (but subject to Section 3(f) of the Lease) and
to enter into any amendment or supplement to the Lease contemplated by
Section 3(d) of the Lease and (ii) to exercise all rights as Owner Trustee
with respect to any determination of Fair Market Rental Value or Fair
Market Sales Value under Section 13 of the Lease and to exercise the rights
of the Lessor (x) upon the return of the Aircraft under Section 12 of the
Lease and (y) under Sections 13(a) and 13(b)(i)(B) or (C) of the Lease;
(b) the Owner Trustee shall have the right, together with the
Indenture Trustee, whether or not an Indenture Default or an Indenture
Event of Default shall have occurred and be continuing, to exercise all
rights of Owner Trustee under Sections 7(e) 8 (with respect to accepting
any Replacement Aircraft or Replacement Engine), 18 (to the extent
permitted by Section 4.03) 10 and 11 of the Lease;
(c) the Owner Trustee shall have the right, together with the
Indenture Trustee (each acting independently), whether or not an Indenture
Default or an Indenture Event of Default shall have occurred and be
continuing, to exercise (i) the rights of Owner Trustee under Section 9
(with respect to insurance coverage and endorsements) of the Lease, and to
receive from the Lessee all notices, financial statements, certificates,
opinions of counsel, and other documents and all information that the
Lessee is permitted or required to give or furnish to the Owner Trustee
pursuant to the Lease, and (ii) inspection rights pursuant to Section 6 of
the Lease;
38
(d) to the exclusion of the Indenture Trustee, whether or not an
Indenture Default or an Indenture Event of Default shall have occurred and
be continuing, (i) all rights of the Owner Trustee to exercise any election
or option or make any decision or determination or give or receive any
notice, consent, waiver, or approval in respect of, or demand, collect, ▇▇▇
for, or otherwise obtain all amounts due from the Lessee on account of, any
Excluded Payments, (ii) the right of the Owner Trustee to maintain separate
insurance pursuant to Section 9(f) of the Lease, and (iii) the right of the
Owner Trustee to solicit bids or retain the Aircraft pursuant to Section 14
of the Lease;
(e) the right, jointly (but not independently) with the
Indenture Trustee, (i) so long as no Indenture Event of Default shall have
occurred and be continuing, to consent to or approve or enter into any
amendment, modification, or supplement of, or to grant any waiver in
respect of, any of the Indenture Documents (other than any amendment,
modification, supplement or waiver relating solely to the Loan Participant
or its interest in the Indenture Estate), and (ii) if an Indenture Event of
Default shall have occurred and be continuing, to consent to or approve or
enter into any amendment, modification, or supplement of, or grant any
waiver in respect of (A) any provision of the Lease if the effect thereof
is to decrease the amount or defer the payment of any Rent, including any
amounts payable under Section 3, 8, 13, 14 or 17 of the Lease, (B) Sections
5, 12 and 17 (but in each case only in respect of return conditions) of the
Lease, (C) Section 9 of the Lease in respect of insurance policies and the
proceeds thereof which by the terms of such policies are payable to the
Owner Participant or the Owner Trustee and not to the Indenture Trustee or
the Noteholders, (D) Section 20(a) of the Lease (but only in respect of any
consent to assignment by the Lessee of its rights or obligations under the
Lease) and (E) any other provision of the Lease if such amendment,
modification, supplement or waiver would impose any additional affirmative
obligations upon the Owner Trustee or the Owner Participant, provided,
--------
however, that the provisions of clauses (2)(A) and (2)(B) of this Section
-------
5.09(e) shall not affect the right of the Indenture Trustee to approve or
consent to any matter or accept any modified performance under the Lease
without the consent of the Owner Trustee or the Owner Participant, so long
as such consent, approval or acceptance does not purport to bind the Owner
Trustee vis-a-vis the Lessee or purport to constitute, as between the Owner
Trustee and the Lessee, a waiver of the rights of the Owner Trustee under
the Lease or an amendment or modification of the obligations of the Lessee
under the Lease;
(f) the Owner Trustee shall have the non-exclusive right, as
Lessor, to seek specific performance of the covenants of the Lessee under
the Lease relating to the protection, insurance, maintenance, possession
and use of the Aircraft; and
(g) so long as no Indenture Event of Default shall have occurred
and be continuing, the right, together with the Indenture Trustee, to
exercise all other rights, powers, privileges and remedies under any
Indenture Document (other than the Lease (other than relating to Excluded
Payments)) or consent to or approve any other matter referred to in any
39
Indenture Document (other than the Lease (other than relating to Excluded
Payments)) as requiring or being subject to the consent or approval of the
Owner Trustee.
Upon consummation of a foreclosure of the Lien and security interest of the
Indenture on the Indenture Estate, all rights of the Owner Trustee or the Owner
Participant (as the case may be) under this Section 5.09 shall terminate, except
insofar as such rights relate to Excluded Payments. Notwithstanding the
foregoing, and subject to the provisions of Sections 4.03 and 4.04(a), the
Indenture Trustee shall at all times have the right, to the exclusion of the
Owner Trustee and the Owner Participant to exercise the remedies set forth in
Section 17 of the Lease (other than in connection with Excluded Payments) and in
Article IV hereof.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture and agrees to receive and
disburse all monies constituting part of the Indenture Estate in accordance with
the terms hereof. The Trust Company and the Indenture Trustee, in their
individual capacities, shall not be answerable or accountable under any
circumstances, except (a) for their own willful misconduct or gross negligence,
(b) in the case of the Indenture Trustee, as provided in the second sentence of
Section 2.04 or the last sentence of Section 5.04, (c) negligence in the
handling or distribution of funds and (d) for liabilities that may result, in
the case of the Trust Company, from the inaccuracy or non-performance of any
representation or warranty or covenant of the Trust Company expressly made in
its individual capacity in the Participation Agreement or any other Operative
Agreement or in Section 6.03 or, in the case of the Indenture Trustee, from the
inaccuracy of any representation or warranty or breach of any covenant of the
Indenture Trustee made in its individual capacity in the Participation Agreement
or any other Operative Agreement. None of the Owner Participant, the Trust
Company or the Indenture Trustee shall be liable for any action or inaction of
any other.
SECTION 6.02. Absence of Duties. In the case of the Indenture
-----------------
Trustee, except in accordance with written instructions furnished pursuant to
Section 5.01 or 5.02, and except as provided in, and without limiting the
generality of, Sections 5.03 and 5.04 and, in the case of the Owner Trustee,
except as provided in Section 4.01, the Indenture Trustee and the Owner Trustee
shall have no duty (i) to see to any registration of the Aircraft or any
recording or filing of the Lease or of this Indenture or any other document, or
to see to the maintenance of any such registration, recording or filing, (ii) to
see to any insurance, whether or not the Lessee shall be in default with respect
thereto, (iii) to see to the payment or discharge of any Lien of any kind
against any part of the Trust Estate or the Indenture Estate, (iv) to confirm,
verify or inquire into the failure to receive any financial statements of the
Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to
the performance or observance of any of the Lessee's covenants under the Lease
with respect to the Aircraft. Except as expressly otherwise herein and in the
Participation Agreement provided,
40
the Noteholders and the Owner Participant shall not have any duty or
responsibility hereunder or thereunder, including, without limitation, any of
the duties mentioned in clauses (i) through (v) above.
SECTION 6.03. No Representations or Warranties as to Aircraft or
--------------------------------------------------
Documents. NONE OF THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR THE TRUST COMPANY
---------
MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY,
CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY
PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART
THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR
ANY PART THEREOF WHATSOEVER, except that the Trust Company in its individual
capacity warrants that on the Delivery Date (i) the Owner Trustee shall have
received whatever title was conveyed to it on the Delivery Date, and (ii) the
Aircraft shall be free and clear of Lessor's Liens attributable to the Trust
Company. Neither the Trust Company nor the Indenture Trustee in its individual
capacity makes or shall be deemed to have made any representation or warranty as
to the validity, legality or enforceability of this Indenture, the Trust
Agreement, the Equipment Notes or any Indenture Document or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Trust Company and the Indenture Trustee
made in their respective individual capacities under this Indenture or in the
Participation Agreement or in the Trust Agreement. The Noteholders and the Owner
Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest. Any monies paid
-------------------------------------
to or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to any Noteholder, the Lessee or the Owner
Trustee as provided in Article III need not be segregated in any manner except
to the extent required by law, and may be deposited under such general
conditions as may be prescribed by law, and the Indenture Trustee shall not
(except as otherwise provided in Section 3.07) be liable for any interest
thereon; provided that any payments received or applied hereunder by the
--------
Indenture Trustee shall be accounted for by the Indenture Trustee so that any
portion thereof paid or applied pursuant hereto shall be identifiable as to the
source thereof.
SECTION 6.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trustee nor the Indenture Trustee shall incur liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the
Board of Directors
41
of any party to the Participation Agreement, certified by the Secretary or an
Assistant Secretary or other Responsible Officer thereof as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been duly
adopted and that the same is in full force and effect. As to the aggregate
unpaid principal amount of Equipment Notes outstanding as of any date, the Owner
Trustee may for all purposes hereof rely on a certificate signed by any Vice
President or other authorized corporate trust officer of the Indenture Trustee.
As to any fact or matter relating to the Lessee the manner of ascertainment of
which is not specifically described herein, the Owner Trustee and the Indenture
Trustee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of the Lessee, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee and the
Indenture Trustee for any action taken or omitted to be taken by them in good
faith in reliance thereon. The Indenture Trustee shall assume, and shall be
fully protected in assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Indenture and to take all action to be taken by it
pursuant to the provisions hereof, and shall not inquire into the authorization
of the Owner Trustee with respect thereto. In the administration of the trusts
hereunder, the Owner Trustee and the Indenture Trustee each may execute any of
the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys and may, at the expense of the Indenture Estate,
advise with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting. Each of the Owner Trustee and
------------------------
the Indenture Trustee acts hereunder solely as trustee herein, and, in the case
of the Owner Trustee, as provided in the Trust Agreement, and not in its
individual capacity, except as otherwise expressly provided in the Operative
Agreements.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
------------
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim on the Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by the Lessee or others, as required under the
Indenture Documents, and shall have the right to use or apply any monies held by
it hereunder in the Indenture Estate toward such payments. The Indenture Trustee
agrees that it shall have no right against the Noteholders or (except as
provided in the Participation Agreement) the Owner Participant for any fee as
compensation for its services as trustee under this Indenture.
SECTION 6.08. May Become Noteholder. Each of the institutions acting
---------------------
as Owner Trustee and Indenture Trustee hereunder may become a Noteholder and
have all rights and benefits of a Noteholder to the same extent as if it were
not the institution acting as Owner Trustee or Indenture Trustee, as the case
may be.
SECTION 6.09. Further Assurances; Financing Statements. At any time
----------------------------------------
and from time to time, upon the request of the Indenture Trustee, the Owner
Trustee shall promptly and duly execute and deliver any and all such further
instruments and documents as may be specified in such
42
request and as are necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby, or to obtain for the Indenture Trustee the full benefit of the specific
rights and powers herein granted, including, without limitation, the execution
and delivery of Uniform Commercial Code financing statements and continuation
statements with respect thereto, or similar instruments relating to the
perfection of the mortgage, security interests or assignments created or
intended to be created hereby.
SECTION 6.10. Assumption of Equipment Notes upon Purchase of
----------------------------------------------
Aircraft. In the event that the Lessee elects to purchase the Aircraft pursuant
--------
to Section 13(b)(ii) of the Lease and in connection therewith shall exercise its
right under Section 5.10 of the Participation Agreement to make such purchase,
in part, by assuming the obligations of the Owner Trustee under the Equipment
Notes, then upon satisfaction of all of the requirements of Section 5.10 of the
Participation Agreement (including the amendment of this Indenture), the rights
and obligations of the Owner Trustee under this Indenture shall be assumed by
the Lessee and, as of the time of such assumption, the Owner Trustee shall be
discharged therefrom (without affecting any liability of the Owner Trustee or
the Trust Company in respect of any obligation of the Owner Trustee or the Trust
Company arising out of or relating to the time before such assumption).
ARTICLE VII
SUCCESSOR TRUSTEES; SEPARATE TRUSTEES
SECTION 7.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Owner Trustee pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee and to each Noteholder.
SECTION 7.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at any
---------
time without cause by giving at least thirty (30) calendar days, prior written
notice to the Owner Participant, the Lessee, the Owner Trustee and each
Noteholder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Noteholders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Participant, the Owner
Trustee, the Lessee and the Indenture Trustee, and the Owner Trustee shall
promptly notify each Noteholder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a majority in
Interest of Noteholders may appoint a successor Indenture Trustee by an
instrument signed by such Noteholders. If a successor Indenture Trustee shall
not have been appointed within thirty (30) calendar days after such notice of
resignation or removal, the Indenture Trustee, the Owner Trustee or any
Noteholder may apply to any court of competent jurisdiction to appoint a
successor Indenture Trustee to act until such time, if any, as a successor shall
have been appointed as above provided. The successor Indenture Trustee so
appointed by such court shall
43
immediately and without further act be superseded by any successor Indenture
Trustee appointed as above provided within one year from the date of the
appointment by such court.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee and to the predecessor Indenture Trustee an
instrument accepting such appointment, and thereupon such successor Indenture
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; provided that the rights of the
--------
predecessor Indenture Trustee to any compensation or indemnity relating to the
period prior to such transfer shall survive such transfer and the predecessor
Indenture Trustee shall retain any Lien which it may have on the Indenture
Estate securing such amounts; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder, provided that such predecessor
--------
Indenture Trustee shall be entitled to deduct from any monies held by it
constituting part of the Indenture Estate all compensation and indemnity then
due to it. Upon the successor Indenture Trustee accepting such appointment, the
predecessor Indenture Trustee shall be relieved of any further obligation and
liability hereunder and under the other Operative Agreements arising after the
time of such transfer.
(c) Any successor Indenture Trustee, however appointed, shall be a
Citizen of the United States and shall also be a bank or trust company having a
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee (including this account) may be
transferred, shall, subject to the terms of paragraph (c) of this Section, be
the Indenture Trustee under this Indenture without further act.
SECTION 7.03 Appointment of Separate Trustees. (a) At any time or
--------------------------------
times, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Indenture Estate may at the time be located or in which
any action of the Indenture Trustee may be required to be performed or taken or
if the Indenture Trustee shall be advised by counsel satisfactory to it that it
is so necessary or prudent in the interests of the Noteholders, or in the event
the Indenture Trustee shall have been requested to do so by a Majority in
Interest of Noteholders, the Indenture Trustee, by an instrument in writing
signed by it, and without the concurrence of the Owner Trustee, may appoint one
or more individuals or corporations to act as separate trustee or separate
trustees or co-
44
trustee, acting jointly with the Indenture Trustee, or to act as separate
trustee or trustees of all or any part of the Indenture Estate with such powers
as may be provided in an agreement supplemental hereto.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee and the Owner Trustee hereby makes,
constitutes and appoints the Indenture Trustee its agent and attorney-in-fact
for it and in its name, place and stead to execute, acknowledge and deliver the
same in the event that the Owner Trustee shall not itself execute and deliver
the same within twenty days after receipt by it of such request so to do. Upon
the acceptance in writing of such appointment by any such separate trustee or
separate trustees or co-trustee, it or they shall be vested with such title to
the Indenture Estate or any part thereof, and with such rights and duties, as
shall be specified in the instrument of appointment, jointly with the Indenture
Trustee (except insofar as local law makes it necessary for any such separate
trustee or separate trustees or co-trustee to act alone) subject to all the
terms of this Indenture. Any separate trustee or separate trustees or co-trustee
may, at any time by an instrument in writing, constitute the Indenture Trustee
its attorney-in-fact and agent with full power and authority to do all acts and
things and to exercise all discretion on its behalf and in its name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Indenture Estate and all assets,
property, rights, powers, trusts, obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustee shall extend to and apply to each separate trustee or co-
trustee appointed pursuant to the foregoing provisions of this Section 7.03.
(d) Every separate trustee and co-trustee hereunder shall, to the
extent permitted by law, be appointed and act and the Indenture Trustee shall
act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of monies shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and such
separate trustee or separate trustees or co-trustee jointly except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights,
45
powers, duties and obligations (including the holding of title to the
Indenture Estate in any such jurisdiction) shall be exercised and
performed by such separate trustee or separate trustees or co-trustee;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such separate trustee or
separate trustees or co-trustee shall be exercised hereunder by such
Person except jointly with, or with the consent of, the Indenture
Trustee; and
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, or take any such action or shall be
advised by such counsel that it is no longer legally required or necessary or
prudent in the interest of the Noteholders or in the event the Indenture Trustee
shall have been requested to do so by a Majority in Interest of Noteholders, the
Indenture Trustee shall execute and deliver an indenture supplement hereto and
all other instruments and agreements necessary or proper to remove any separate
trustee or separate trustees or co-trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any separate trustee or separate trustees or co-trustee shall be
sufficient warrant to such separate trustee or separate trustees or co-trustee,
as the case may be, to take such action as may be so requested, approved or
consented to.
(f) Notwithstanding any other provision of this Section 7.03, the
powers of any separate trustee or separate trustees or co-trustee appointed
pursuant to this Section 7.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
ARTICLE VII
SUPPLEMENTS AND AMENDMENTS TO
THIS INDENTURE AND OTHER DOCUMENTS
SECTION 8.01. Instructions of Majority; Limitations. At any time and
-------------------------------------
from time to time but subject to the terms and provisions of this Indenture, (i)
the Owner Trustee (but only on the written request of the Owner Participant) and
the Indenture Trustee (but only on the written request of a Majority in Interest
of Noteholders) shall execute a supplement hereto for the purpose of adding
provisions to, or changing or eliminating provisions of, this Indenture as
specified in such request, and (ii) the Owner Trustee may (but only with the
written consent of the Owner Participant and on the written request of a
Majority in Interest of Noteholders) enter into such written amendment of or
supplement to the Lease or any other Indenture Document to which it is party as
may be specified in such request; provided, however, that, without the consent
-------- -------
of each Noteholder,
46
no such amendment of or supplement to any such document, or waiver or
modification of the terms of any thereof, shall (i) modify any of the provisions
of this Section 8.01 or the definitions of the terms "Breakage Cost" (and any
related definition), "Default", "Event of Default", "Excluded Payments",
------- ---------------- -----------------
"Indenture Default", "Indenture Event of Default", "Lessor's Cost", "Majority in
----------------- -------------------------- ------------- -----------
Interest of Noteholders" or "Operative Agreements", contained herein or in any
----------------------- --------------------
other Operative Agreement (except to change default definitions by providing for
additional events of default), (ii) increase the principal amount of any
Equipment Note or reduce the amount or extend the time of payment of any amount
owing or payable under any Equipment Note or (except as provided in this
Indenture) increase or reduce the Breakage Cost or interest payable on any
Equipment Note (except that only the consent of the applicable Noteholder shall
be required for any decrease in any amounts of or the rate of Breakage Cost or
interest payable on such Equipment Note or any extension for the time of payment
of any amount payable under such Equipment Note), or alter or modify the
provisions of Article III with respect to the order of priorities in which
distributions thereunder shall be made or with respect to the amount or time of
payment of any such distribution, (iii) reduce, modify or amend any indemnities
in favor of any Noteholder or in favor of or to be paid by the Owner Participant
or alter the definition of "Indemnitee" to exclude any Noteholder (except as
----------
consented to by each Person adversely affected thereby), (iv) modify or amend
Section 3(f) of the Lease or, except as expressly contemplated by any provision
of the Lease, reduce the amount or extend the time of payment of Basic Rent or
Termination Value (or other amounts payable therewith) for the Aircraft as set
forth in the Lease (except to the extent required to match any action consented
to by any Noteholder referred to in the parenthetical phrase in clause (ii)
above), or (v) modify, amend or supplement the Lease or consent to any
assignment of the Lease, in either case releasing the Lessee from its
obligations in respect of the payment of Basic Rent (except as above provided)
or Termination Value (or other amounts payable therewith) for the Aircraft or
altering the absolute and unconditional character of such obligations as set
forth in Section 3(g) of the Lease or change any of the circumstances under
which Termination Value (or other amounts payable therewith) are payable. This
Section 8.01 shall not apply to any indenture or indentures supplemental hereto
permitted by, and complying with the terms of, Section 5.07, Section 7.03 or
Section 8.04. Notwithstanding the foregoing, without the consent of each
Noteholder, no such supplement to this Indenture, or waiver or modification of
the terms hereof or of any other agreement or document shall expressly permit
the creation of any Lien on the Indenture Estate or any part thereof, except as
expressly permitted herein or in the Participation Agreement or the Lease, or
deprive any Noteholder of the benefit of the Lien of this Indenture on the
Indenture Estate, except as provided in Sections 5.01 and 5.02 or in connection
with the exercise of remedies under Article IV.
SECTION 8.02. Trustees Protected. If, in the opinion of the
------------------
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as the Indenture Trustee hereunder any document required to be executed
pursuant to the terms of Section 8.01 affects any right, duty, immunity or
indemnity with respect to it under this Indenture, the Indenture Trustee and the
Owner Trustee may in their discretion decline to execute such document.
SECTION 8.03. Documents Mailed to Noteholders. Promptly after the
-------------------------------
execution by the Owner Trustee or the Indenture Trustee of any document entered
into pursuant to Section
47
8.01, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Indenture Trustee and the Indenture Trustee shall
mail, by certified mail, postage prepaid, a conformed copy thereof to each
Noteholder at its address shown on the Register, but the failure of the Owner
Trustee or Indenture Trustee, as the case may be, to mail such conformed copies
shall not impair or affect the validity of such document.
SECTION 8.04. No Request Necessary for Lease Supplement or Indenture
------------------------------------------------------
Supplement. Notwithstanding anything contained in Section 8.01, no written
----------
request or consent of the Indenture Trustee, any Noteholder or the Owner
Participant pursuant to Section 8.01 shall be required to enable the Owner
Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms
of the Lease to subject the Aircraft or other property thereto or to confirm a
Rent adjustment in accordance with Section 3(d) thereof or to execute and
deliver an Indenture Supplement to subject the Aircraft or other property hereto
pursuant to the terms hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Termination of Indenture. Upon (or at any time after)
------------------------
payment in full of the principal of and interest on and Breakage Cost, if any,
and all other Secured Obligations due under, or otherwise due to the holders of,
all Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Noteholders and the Indenture Trustee hereunder or under
the Participation Agreement or the other Operative Agreements or otherwise
secured hereby, the Owner Trustee shall direct the Indenture Trustee to execute
and deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and releasing
the Indenture Documents from the assignment and pledge thereof hereunder, and
the Indenture Trustee shall execute and deliver such instrument as aforesaid
and, at the Owner Trustee's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Owner Participant
to give effect to such release; provided, however, that this Indenture and the
-------- -------
trusts created hereby shall earlier terminate and this Indenture shall be of no
further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property constituting part of the Indenture Estate and
the final distribution by the Indenture Trustee of all monies or other property
or proceeds constituting part of the Indenture Estate in accordance with the
terms hereof. Except as aforesaid otherwise provided, this Indenture and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
SECTION 9.02 No Legal Title to Indenture Estate in Noteholders. No
-------------------------------------------------
Noteholder shall have legal title to any part of the Indenture Estate. No
transfer, by operation of law or otherwise, of any Equipment Note or other
right, title and interest of any Noteholder in and to the Indenture Estate or
hereunder shall operate to terminate this Indenture or entitle such Noteholder
or any successor or transferee of such holder to an accounting or to the
transfer to it of legal title to any part of the Indenture Estate.
48
SECTION 9.03. Sale of Aircraft by Indenture Trustee is Binding. Any
------------------------------------------------
sale or other conveyance of any Aircraft by the Indenture Trustee made pursuant
to the terms of this Indenture or of the Lease shall bind the Noteholders and
shall be effective to transfer or convey all right, title and interest of the
Indenture Trustee, the Owner Trustee, the Owner Participant and the Noteholders
in and to such Aircraft. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
sale or conveyance or as to the application of any sale or other proceeds with
respect thereto by the Indenture Trustee.
SECTION 9.04. Indenture for Benefit of Owner Trustee, Indenture
-------------------------------------------------
Trustee, Owner Participant and Noteholders. Nothing in this Indenture, whether
------------------------------------------
express or implied, shall be construed to give to any person other than the
Trust Company, the Owner Trustee, the Indenture Trustee (in its individual and
trust capacities), the Owner Participant, the Lessee and the Noteholders any
legal or equitable right, remedy or claim under or in respect of this Indenture.
SECTION 9.05. No Action Contrary to Lessee's Rights under the Lease.
----------------------------------------------------
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action in violation of the Lessee's rights under the Lease, including the right
to possession and use of the Aircraft in accordance with the terms of the Lease.
SECTION 9.06. Notices. Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing and
delivered in the manner and at the address provided in Section 12.01 of the
Participation Agreement.
SECTION 9.07. Severability. Any provision of this Indenture which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.08. No Oral Modifications or Continuing Waivers. No terms or
-------------------------------------------
provisions of this Indenture or the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or other Person against whom enforcement of the change, waiver,
discharge or termination is sought and any other party or other Person whose
consent is required pursuant to this Indenture; and any waiver of the terms
hereof or of any Equipment Note shall be effective only in the specific instance
and for the specific purpose given.
SECTION 9.09. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
Any request, notice, direction, consent, waiver or other
49
instrument or action by any Noteholder shall bind the successors and assigns of
such Noteholder. This Indenture and the Indenture Estate shall not be affected
by any amendment or supplement to the Trust Agreement or by any other action
taken under or in respect of the Trust Agreement, except that each reference in
this Indenture to the Trust Agreement shall mean the Trust Agreement as amended
and supplemented from time to time to the extent permitted hereby and thereby
and by the Participation Agreement.
SECTION 9.10. Headings. The headings of the various Articles and
--------
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 9.11. Governing Law. THIS INDENTURE SHALL IN ALL RESPECTS BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK.
SECTION 9.12. Counterpart Form. This Indenture may be executed by the
----------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.13. Waiver of Jury Trial. EACH OF THE OWNER TRUSTEE AND THE
--------------------
INDENTURE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 9.14. Submission to Jurisdiction. Each of the Owner Trustee
--------------------------
and the Indenture Trustee agrees that any legal action or proceeding with
respect to this Indenture or any of the transactions contemplated hereby, or to
enforce any judgment obtained against it in respect of any of the foregoing (a
certified or exemplified copy of which judgment shall be conclusive evidence of
the fact and of the amount of any indebtedness therein described), may be
brought in the courts of the State of New York in the City and County of New
York and of the United States for the Southern District of New York and by the
execution and delivery of this Indenture, each such Person irrevocably consents
and submits to the nonexclusive jurisdiction of each such court, acknowledges
its competence and irrevocably agrees to be bound by a final judgment of such
court. Each such Person irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Each of the Owner Trustee and the Indenture Trustee hereby generally
consents to service of process to the respective addresses set forth in Section
12.01 of the Participation Agreement in
50
the manner specified in such Section 12.01 of the Participation Agreement.
Nothing in this paragraph shall affect the right of any party hereto or their
successors or assigns to bring any action or proceeding against any other party
hereto or their property in the courts of other jurisdictions.
SECTION 9.15. Payment in Dollars.
------------------
(i) If, for the purposes of obtaining judgment in, or enforcing the
judgment of, any court, it is necessary for any Person to convert a sum due
hereunder in Dollars into another currency (the "Judgment Currency"), the
-----------------
rate of exchange used shall be that at which in accordance with normal
banking procedures such Person could purchase Dollars with the Judgment
Currency on the Business Day preceding that on which final judgment is
given or the order of enforcement made.
(ii) The obligation of the Owner Trustee in respect of any sum due
from it to any Person hereunder shall, notwithstanding any judgment or
order of enforcement in such Judgment Currency, be discharged only to the
extent that on the Business Day following that on which final judgment is
given or the order of enforcement made, such Person may in accordance with
normal banking procedures purchase Dollars with the Judgment Currency; if
the Dollars so purchased are less than the sum originally due to such
Person in Dollars, the Owner Trustee agrees, as a separate obligation and
notwithstanding any such judgment or order of enforcement, to indemnify
such Person against such loss attributable to any of its obligations
hereunder, and if the Dollars so purchased exceed the sum originally due
from the Owner Trustee, in Dollars, such Person shall remit to the Owner
Trustee such excess. Any additional amount due from the Owner Trustee
under this Section 9.15 will be due as a separate debt and shall not be
affected by judgment or order of enforcement being obtained for any other
sums due under or in respect of this Indenture or any other Operative
Agreement.
51
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written, and this Indenture having become effective
only upon such execution and delivery.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity, except as
otherwise expressly provided in the Operative
Agreements, but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ALLFIRST BANK, not in its individual capacity,
except as expressly provided herein, but solely as
Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
52
EXHIBIT A
to Trust Indenture and Security Agreement
INDENTURE SUPPLEMENT
INDENTURE SUPPLEMENT No. ________ dated __________ __, 2000 (this
"Indenture Supplement") of FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not
in its individual capacity except as expressly provided in the Operative
Agreements, but solely as Owner Trustee under the Trust Agreement (in such
capacity, herein called the "Owner Trustee").
-------------
W I T N E S S E T H
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement, which shall particularly describe the Aircraft and any
Replacement Airframe or Replacement Engine included in the property covered by
the Indenture.
WHEREAS, the Trust Indenture and Security Agreement N588ML dated as of
September 21, 2000 (herein called the "Indenture") between the Owner Trustee and
---------
Allfirst Bank, as Indenture Trustee (herein called the "Indenture Trustee"),
-----------------
provides for the execution and delivery of a supplement thereto substantially in
the form hereof which shall particularly describe the Aircraft (such term and
other defined terms in the Indenture being herein used with the same meanings)
and any Replacement Airframe or Replacement Engine included in the Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS*, the Indenture relates to the Airframe and Engines described
below and a counterpart of the Indenture is attached hereto and made a part
hereof and this Indenture Supplement, together with such counterpart of the
Indenture, is being filed for recordation on the date hereof with the Federal
Aviation Administration as one document.
WHEREAS** the Indenture and Indenture Supplement dated _________, 2000
(the Indenture being attached to and made a part of such Indenture Supplement
and filed therewith) have been duly recorded pursuant to Chapter 441 of Title 49
of the United States Code, as amended, on ___________, 2000, as one document and
have been assigned Conveyance No.__________.
NOW, THEREFORE, this Indenture Supplement witnesseth, that, to secure
the prompt payment of the principal of and Breakage Cost (if any) and interest
on, and all other amounts
_____________________
* This recital is not to be included in the first Indenture Supplement.
** This recital is to be included only in the first Indenture Supplement.
1
due with respect to, all Equipment Notes from time to time outstanding under the
Indenture and the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions for the benefit of the Noteholders in the
Indenture and in the Participation Agreement and the Equipment Notes, and the
prompt payment of any and all amounts from time to time owing under the
Indenture or the Participation Agreement or the other Operative Agreements by
the Owner Trustee, the Owner Participant or the Lessee to the Noteholders, and
for the uses and purposes and subject to the terms and provisions of the
Indenture, and in consideration of the premises and of the covenants contained
in the Indenture, and of the acceptance of the Equipment Notes by the
Noteholders, and of the sum of $1 paid to the Owner Trustee by the Indenture
Trustee at or before the delivery hereof, the receipt whereof is hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee and its successors and assigns, for the security and benefit
of the Noteholders, in the trust created by the Indenture, a first priority
security interest in and first mortgage lien upon, all right, title and interest
of the Owner Trustee in, to and under the following described property:
AIRFRAME
one airframe identified as follows:
FAA Registration Manufacturer's Serial
Manufacturer Model Number Number
------------ ----- ------ ------
Bombardier Inc. Canadair Regional Jet N588ML 7368
CL-600-2B19
together with all Parts, appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time thereto
belonging, owned by the Owner Trustee and installed in or appurtenant to said
aircraft and all records, logs, manuals and data, inspection, modification and
overhaul records and all other documents at any time maintained with respect to
the foregoing property.
AIRCRAFT ENGINES
(2) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as follows:
Manufacturer Model Manufacturer's Serial Numbers
------------ ----- -----------------------------
General Electric Company CF34-3B1 GE-E-872649
GE-E-872650
together with all Parts, equipment and accessories thereto belonging, by
whomsoever manufactured, owned by the Owner Trustee and installed in or
appurtenant to said aircraft engines and all records,
2
logs, manuals and data, inspection, modification and overhaul records and all
other documents at any time maintained with respect to the foregoing property.
Together with all substitutions, replacements and renewals of the
property above described, and all property which shall hereafter become
physically attached to or incorporated in the property above described, whether
the same are now owned by the Owner Trustee or shall hereafter be acquired by
it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors and assigns, for the security
and benefit of the Noteholders, in the trust created by the Indenture, all of
the right, title and interest of the Owner Trustee in, to and under Lease
Supplement No. _______of even date (other than Excluded Payments, if any)
covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Noteholders for the uses and purposes and subject to the terms and
provisions set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Airframe/Engines referred to in this Indenture Supplement and the aforesaid
Lease Supplement have been delivered to the Owner Trustee and are included in
the property of the Owner Trustee and are covered by all the terms and
conditions of the Indenture and are subject to the Lien of the Indenture.
This Indenture Supplement is being delivered in the State of New York.
3
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture
Supplement to be duly executed by one of its officers thereunto authorized, this
_________day of _________, 2000.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided in the
Operative Agreements, but
solely as Owner Trustee
By: __________________________
Name:
Title:
4
EXHIBIT B
to Trust Indenture and Security Agreement
FORM OF EQUIPMENT NOTE
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE
UNLESS REGISTERED UNDER SAID ACT OR LAWS OR UNLESS AN EXEMPTION IS AVAILABLE
UNDER SAID ACT OR LAWS.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity except
as otherwise expressly provided in the
Operative Agreements, but solely as Owner Trustee
EQUIPMENT NOTE
ISSUED IN CONNECTION WITH ONE AIRCRAFT INITIALLY BEARING
UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NO.
N588ML AND TWO GENERAL ELECTRIC ENGINES
No. R-
$ ____________, ____
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided in the Operative Agreements, but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
-------------
under that certain Trust Agreement N588ML dated as of September 21, 2000,
between the Owner Participant named therein and the Owner Trustee (herein as
such Trust Agreement may be amended or supplemented from time to time in
accordance with the applicable provisions thereof called the "Trust Agreement"),
---------------
hereby promises to pay to _______________________________ __________________, or
registered transferees, the principal sum of
_________________________________________ Dollars, in the number of installments
set forth in Annex A hereto, and each installment to be due and payable on a
Payment Date and in an amount equal to the amount set forth in Annex A hereto
opposite such Payment Date, together with interest on the unpaid principal
amount hereof from time to time outstanding from and including the date hereof
until such principal amount is paid in full at the Applicable Rate, payable in
arrears on each Payment Date and on the date this Equipment Note is paid in
full. This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof, and, to the extent permitted by applicable law, interest and
other amounts due hereunder, not paid when due (whether at stated maturity, by
acceleration or otherwise), for any period during which the same shall be
overdue, payable on demand by the holder hereof given through the Indenture
Trustee.
1
Interest shall be calculated on the basis of a year of 360 days
consisting of twelve 30-day months; provided that interest on past-due amounts
--------
shall be calculated on the basis of a year of 360-days and actual days elapsed.
If any sum payable hereunder falls due on a day which is not a Business Day,
then such sum shall be payable on the next succeeding Business Day, without
additional interest as a result of such extension so long as such payment is
made on such Business Day; provided that if by virtue of such extension such
amount would be paid in the next succeeding calendar month, such amount shall be
paid on the next preceding Business Day.
All payments of principal, Breakage Cost and interest and other
amounts to be made to the holder hereof or under the Trust Indenture and
Security Agreement N588ML dated as of September 21, 2000 (as modified, amended
or supplemented from time to time in accordance with the provisions thereof,
herein called the "Indenture", the terms defined therein and not otherwise
---------
defined herein being used herein with the same meanings) between the Owner
Trustee and Allfirst Bank, as Indenture Trustee thereunder, shall be made only
from the income and proceeds from the Indenture Estate and only to the extent
that the Owner Trustee shall have sufficient income or proceeds from the
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of the Indenture. Each holder hereof, by its
acceptance of this Equipment Note, agrees that it will look solely to the income
and proceeds from the Indenture Estate to the extent available for distribution
to the holder hereof as above provided and that none of the Owner Participant,
the Trust Company or the Indenture Trustee is personally liable to the holder
hereof for any amounts payable or any liability under this Equipment Note or
under the Indenture, except, in the case of the Trust Company or the Indenture
Trustee, as expressly provided in the Indenture or the Participation Agreement.
Principal and interest and other amounts due hereon shall be payable
in Dollars in immediately available funds prior to 11:00 a.m., New York time, on
the due date thereof, to the Indenture Trustee at its Corporate Trust Department
and the Indenture Trustee shall, subject to the terms and conditions of the
Indenture, remit all such amounts so received by it to the holder hereof in
accordance with the terms of the Indenture at such account or accounts at such
financial institution or institutions as the holder hereof shall have designated
to the Indenture Trustee in writing, in immediately available funds, such
payment to be made, in the case of any such designated account in New York, New
York, prior to 2:00 p.m., New York time, on the due date thereof. In the event
the Indenture Trustee, through negligence or willful misconduct, shall fail to
make any such payment as provided in the immediately foregoing sentence after
its receipt of funds at the place and prior to the time specified above, the
Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate the holder hereof for loss of use of funds in a commercially
reasonable manner. All such payments by the Owner Trustee and the Indenture
Trustee shall be made free and clear of and without reduction for or on account
of all wire or other like charges.
Each holder hereof, by its acceptance of this Equipment Note, agrees
that, except as otherwise expressly provided in the Indenture, each payment
received by it in respect hereof shall be applied, first, to the payment of any
-----
amount (other than the principal of or interest on this Equipment Note) due in
respect of this Equipment Note, second, to the payment of interest hereon (as
------
well as any interest on overdue principal and, to the extent permitted by law,
interest and other amounts payable hereunder) due and payable hereunder, third,
-----
to the payment of the principal of this
2
Equipment Note then due and fourth, the balance, if any, remaining thereafter,
------
to the payment of the principal of this Equipment Note remaining unpaid, in the
manner set forth in the last sentence of Section 2.05 of the Indenture.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by the Owner Trustee pursuant to
the terms of the Indenture. The Indenture Estate is held by the Indenture
Trustee as security, in part, for the Equipment Notes. Reference is hereby made
to the Indenture and the Participation Agreement referred to therein for a
statement of the rights and obligations of the holder hereof, and the nature and
extent of the security for this Equipment Note and of the rights and obligations
of the other Noteholders, and the nature and extent of the security for the
other Equipment Notes, as well as for a statement of the terms and conditions of
the trusts created by the Indenture, to all of which terms and conditions in the
Indenture and such Participation Agreement each holder hereof agrees by its
acceptance of this Equipment Note.
There shall be maintained a Register for the purpose of registering
transfers and exchanges of Equipment Notes at the Corporate Trust Department of
the Indenture Trustee or at the office of any successor indenture trustee in the
manner provided in Section 2.07 of the Indenture. As provided in the Indenture,
this Equipment Note or any interest herein may, subject to the next following
paragraph, be assigned or transferred, and the Equipment Notes are exchangeable
for a like aggregate original principal amount of Equipment Notes of any
authorized denomination, as requested by the Noteholder surrendering the same.
Prior to the due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee may deem and treat
the person in whose name this Equipment Note is registered on the Register as
the absolute owner of this Equipment Note and the Noteholder for the purpose of
receiving payment of all amounts payable with respect to this Equipment Note and
for all other purposes whether or not this Equipment Note is overdue, and
neither the owner Trustee nor the Indenture Trustee shall be affected by notice
to the contrary.
This Equipment Note is subject to prepayment only as permitted by
Sections 2.10, 2.11 and 2.14 of the Indenture and to purchase without consent of
the holder hereof only as provided in Section 2.12 of the Indenture, and the
holder hereof, by its acceptance of this Equipment Note, agrees to be bound by
said provisions.
This Equipment Note shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose, unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized signatories on the certificate of authentication below.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
3
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized,
as of the date hereof.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Owner Trustee
By: ____________________
Name:
Title:
4
FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
ALLFIRST BANK,
as Indenture Trustee
By: ____________________________________
Authorized Signatory
5
Annex A to
Equipment Note
SCHEDULE OF PRINCIPAL PAYMENTS
The Applicable Rate equals ______%.
Principal Amount to
Be Paid (expressed as a
percentage of the original principal
Payment Date amount of the Equipment Note)
------------ -----------------------------
6
Annex A to
Equipment Note
The portion of this Annex appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.