EXHIBIT 10.50(d)
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PARTICIPATION AGREEMENT
(ATLANTIC COAST AIRLINES TRUST NO. _____)
Dated as of September 30, 1997
among
ATLANTIC COAST AIRLINES,
Lessee and Initial Owner Participant
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity (except as otherwise
expressly set forth herein) but solely as trustee,
Owner Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity (except as otherwise
expressly set forth herein) but solely as trustee,
Indenture Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Pass-Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
Subordination Agent
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LEVERAGED LEASE OF ONE CANADAIR REGIONAL JET SERIES 200 ER AIRCRAFT
SERIAL NO. _____, REGISTRATION NO. _____
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TABLE OF CONTENTS
Page
Initial Recitals..................................................................................................1
ARTICLE 1 DEFINITIONS............................................................................................3
ARTICLE 2 ISSUANCE OF PASS-THROUGH CERTIFICATES; ISSUANCE AND PURCHASE OF CERTIFICATES...........................3
Section 2.01. Transfer of Funds...................................................................................3
Section 2.02. Certificates.......................................................................................4
Section 2.03. Amendments on Delivery or Transfer Date.............................................................5
ARTICLE 3 PARTICIPATION IN INVESTMENT ON DELIVERY DATE; DELIVERY OF AIRCRAFT.....................................6
Section 3.01. Lessee's Notice of Delivery Date....................................................................6
Section 3.02. Commitments to Participate in Purchase Price........................................................6
Section 3.03. Reserved...........................................................................................8
Section 3.04. Reserved...........................................................................................8
Section 3.05. Postponement of Delivery Date.......................................................................8
Section 3.06. Closing.............................................................................................9
ARTICLE 4 CONDITIONS PRECEDENT...................................................................................9
Section 4.01. Conditions Precedent (Certificate Closing Date).....................................................9
Section 4.02. Conditions Precedent (Delivery Date)...............................................................16
Section 4.03. Opinion of Special Aviation Counsel Upon Registration..............................................24
ARTICLE 5 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS..........................................................24
Section 5.01. Conditions Precedent to Lessee's Obligations.......................................................24
ARTICLE 6 LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS....................................................24
Section 6.01. Lessee's Representations and Warranties............................................................24
Section 6.02. Offering by Lessee.................................................................................29
Section 6.03. Certain Covenants of Lessee........................................................................30
Section 6.04. Survival of Representations and Warranties.........................................................36
ARTICLE 7 OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................36
Section 7.01. Reserved..........................................................................................36
Section 7.02. Citizenship.......................................................................................36
Section 7.03. Concerning Assignment of Interests of Owner Participant...........................................37
Section 7.04. Representations, Covenants and Warranties of and the Owner Trustee............................37
Section 7.05. Representations, Warranties and Covenants of the Indenture Trustee.................................39
Section 7.06. Indenture Trustee's Notice of Default..............................................................41
Section 7.07. Releases from Indenture............................................................................41
Section 7.08. Covenant of Quiet Enjoyment........................................................................41
Section 7.09. Pass-Through Trustee's Representations and Warranties.............................................41
Section 7.10. Survival of Representations, Warranties and Covenants..............................................42
Section 7.11. Lessee's Assumption of the Certificates............................................................42
Section 7.12. Indebtedness of Owner Trustee.....................................................................44
Section 7.13. Compliance with Trust Agreement, Etc..............................................................44
Section 7.14. Subordination Agent's Representations, Warranties and Covenants....................................45
ARTICLE 8 TAXES.................................................................................................47
Section 8.01. Lessee's Obligation to Pay Taxes..................................................................47
Section 8.02. After-Tax Basis....................................................................................51
Section 8.03. Time of Payment....................................................................................52
Section 8.04. Contests...........................................................................................52
Section 8.05. Refunds...........................................................................................54
Section 8.06. Lessee's Reports...................................................................................55
Section 8.07. Survival of Obligations...........................................................................55
Section 8.08. Payment of Taxes...................................................................................56
Section 8.09. Reimbursements by Indemnitees Generally...........................................................56
Section 8.10. Special Indemnity.................................................................................56
Section 8.11. Verification......................................................................................56
ARTICLE 9 GENERAL INDEMNITY.....................................................................................56
Section 9.01. Generally..........................................................................................56
Section 9.02. After-Tax Basis...................................................................................60
Section 9.03. Subrogation........................................................................................60
Section 9.04. Notice and Payment.................................................................................60
Section 9.05. Refunds............................................................................................61
Section 9.06. Defense of Claims..................................................................................61
Section 9.07. Survival of Obligations............................................................................62
Section 9.08. Effect of Other Indemnities........................................................................62
Section 9.09. Interest...........................................................................................62
Section 9.10. Special Indemnity..................................................................................62
ARTICLE 10 TRANSACTION COSTS....................................................................................63
Section 10.01. Transaction Costs and Other Costs.................................................................63
ARTICLE 11 SUCCESSOR OWNER TRUSTEE..............................................................................65
Section 11.01. Appointment of Successor Owner Trustee............................................................65
ARTICLE 12 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS.......................................66
Section 12.01. Liabilities of the Owner Participant..............................................................66
Section 12.02. Interest of Holders of Certificates...............................................................67
ARTICLE 13 OTHER DOCUMENTS......................................................................................67
Section 13.01. Consent of Lessee to Other Documents..............................................................67
Section 13.02. Further Assurances................................................................................67
Section 13.03. Pass-Through Trustee's and Subordination Agent's Acknowledgment..................................67
ARTICLE 14 NOTICES..............................................................................................68
Section 14.01. Notices...........................................................................................68
ARTICLE 15 REFINANCING/REOPTIMIZATION...........................................................................69
Section 15.01. Refinancing.......................................................................................69
Section 15.02. Reoptimization...................................................................................72
ARTICLE 16 CONFIDENTIALITY.......................................................................................73
Section 16.01. Confidentiality...................................................................................73
ARTICLE 17 MISCELLANEOUS........................................................................................74
Section 17.01. Reserved.........................................................................................74
Section 17.02. Collateral Account................................................................................74
Section 17.03. Counterparts......................................................................................75
Section 17.04. No Oral Modifications.............................................................................75
Section 17.05. Captions..........................................................................................75
Section 17.06. Successors and Assigns............................................................................76
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and the Pass-Through Trustee......................76
Section 17.08. Severability......................................................................................76
Section 17.09. Public Release of Information.....................................................................76
Section 17.10. Certain Limitations on Reorganization.............................................................77
Section 17.11. GOVERNING LAW.....................................................................................77
Section 17.12. Section 1110 Compliance...........................................................................77
Section 17.13. Reliance of Liquidity Providers...................................................................77
SCHEDULE I Definitions
SCHEDULE II Certificate Information
SCHEDULE III Debt Portion
SCHEDULE IV Mandatory Economic Terms
SCHEDULE V Mandatory Document Terms
EXHIBIT A(1)(a) Opinion of Lessee's Counsel (Certificate Closing Date)
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel (Certificate Closing Date)
EXHIBIT A(2)(a) [Reserved]
EXHIBIT A(2)(b) [Reserved]
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4)(a) Opinion of Owner Trustee's Special Counsel (Certificate Closing Date)
EXHIBIT A(5) Opinion of Pass-Through Trustee's and Subordination Agent's Special Counsel
EXHIBIT A(6)(A) Opinion of Liquidity Provider's Counsel
EXHIBIT A(6)(b) Opinion of Liquidity of Provider's Special Counsel
EXHIBIT A(7) [Reserved]
EXHIBIT A(8) [Reserved]
EXHIBIT B Lease Agreement
EXHIBIT C Trust Indenture and Security Agreement
EXHIBIT D Trust Agreement
EXHIBIT E Purchase Agreement Assignment with PAA Consent
EXHIBIT F Engine Warranty Assignment with Engine Manufacturer's Consent
PARTICIPATION AGREEMENT
(ATLANTIC COAST AIRLINES TRUST NO. ______)
PARTICIPATION AGREEMENT (ATLANTIC TRUST AIRLINES TRUST NO. _______)
dated as of September 30, 1997 (this "Agreement") among ATLANTIC COAST AIRLINES,
a California corporation (herein, together with its successors and permitted
assigns, the "Lessee" and the "Initial Owner Participant"), STATE STREET BANK
AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as otherwise expressly
stated herein, but solely as owner trustee under the Trust Agreement referred to
below (in such capacity as trustee, together with its successors and permitted
assigns, the "Owner Trustee"), THE FIRST NATIONAL BANK OF MARYLAND, a national
banking association, not in its individual capacity, except as otherwise
expressly stated herein, but solely as indenture trustee under the Indenture
referred to below (in such capacity as trustee, together with its successors and
permitted assigns, the "Indenture Trustee"), THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association, not in its individual capacity, except
as otherwise expressly stated herein, but solely as pass-through trustee of four
separate Pass-Through Trusts (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass-Through Trustee"), and THE FIRST
NATIONAL BANK OF MARYLAND, a national banking association, not in its individual
capacity, except as otherwise expressly stated herein, but solely as
subordination agent (in such capacity as trustee, together with its successors
and permitted assigns, the "Subordination Agent").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Initial Owner Participant has entered into the Trust
Agreement with the Owner Trustee in its individual capacity, substantially in
the form of Exhibit D hereto, pursuant to which Trust Agreement the Owner
Trustee agrees, among other things, to hold the Lessor's Estate for the benefit
of the Initial Owner Participant on the terms specified in the Trust Agreement,
subject to the Lien of the Indenture.
WHEREAS, on the Pass-Through Closing Date, a closing occurred with
respect to the offering of Pass-Through Certificates issued by each Pass-Through
Trust, an allocable amount of the proceeds of which offering will be used by the
Pass-Through Trustee to purchase for each such Pass-Through Trust the
Certificates of the Series and Maturity applicable thereto.
WHEREAS, as of September 26, 1997, the Owner Trustee and the Indenture
Trustee have entered into the Indenture for the benefit of the Pass-Through
Trustee, pursuant to which the Owner Trustee is issuing the Certificates to the
Subordination Agent on behalf of the Pass-Through Trustee as evidence of the
loans made by the Pass-Through Trustee to the Owner Trustee, the proceeds of
which loans will be deposited by the Indenture Trustee on behalf of the Owner
Trustee in the Collateral Account.
WHEREAS, on the Pass-Through Closing Date, (i) ING Bank N.V. entered
into three revolving credit agreements (each, a "Liquidity Facility"), one for
the benefit of the holders of Pass-Through Certificates of each of the
Pass-Through Trusts for the Series A Certificates, the Series B Certificates and
the Series C Certificates, with the Subordination Agent, as agent for the
Pass-Through Trustee on behalf of each such Pass-Through Trust; and (ii) the
Pass-Through Trustees, each Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement.
WHEREAS, the Certificates will be held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass-Through Trustee
for each of the Pass-Through Trusts.
WHEREAS, prior to the Delivery Date, the Certificates will be secured
by the Liquid Collateral.
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant:
(a) on the Delivery Date, to purchase the Aircraft from the Seller;
(b) on the Delivery Date, to execute and deliver the Lease
substantially in the form of Exhibit B hereto, pursuant to which,
subject to the terms and conditions set forth in the Lease, the Owner
Trustee agrees to lease to the Lessee, and the Lessee agrees to lease
from the Owner Trustee, the Aircraft on the Delivery Date, such lease
to be effected by the execution and delivery on the Delivery Date of a
Lease Supplement, in the form of Exhibit A to the Lease, covering the
Aircraft and incorporating by reference all of the terms of the Lease;
(c) to execute and deliver the Indenture, substantially in the
form of Exhibit C hereto, for the benefit of the Holders from time to
time of the Certificates, pursuant to which the Owner Trustee agrees,
among other things, (A) to deposit, mortgage and pledge with the
Indenture Trustee, as part of the Trust Indenture Estate, all of the
Lessor's Estate but not Excepted Payments, (B) on the Certificate
Closing Date, to issue Certificates substantially in the form set forth
in Exhibit B to the Indenture, the proceeds of the sale of which will
be held by the Indenture Trustee on behalf of the Owner Trustee in the
Collateral Account until released in accordance with the terms hereof
and of the Indenture, and (C) on the Delivery Date, to execute and
deliver the Indenture Supplement, substantially in the form of Exhibit
A to the Indenture, covering the Aircraft and supplementing the
Indenture; and
(d) on the Delivery Date, to execute and deliver (i) the
Purchase Agreement Assignment, whereby the Lessee assigns to the Owner
Trustee the right to purchase the Aircraft from the Seller and certain
of the Lessee's rights and interests under the Purchase Agreement to
the extent that the same relate to the Aircraft (except to the extent
reserved in the Purchase Agreement Assignment), which Purchase
Agreement Assignment is to include as an annex a PAA Consent executed
by the Manufacturer, and (ii) the Engine Warranty Assignment pursuant
to which the Lessee assigns to the Owner Trustee certain of the
Lessee's rights under the General Terms Agreement with respect to the
Engines, which Engine Warranty Assignment is to include as an annex the
Engine Manufacturer's Consent executed by the Engine Manufacturer, the
Purchase Agreement Assignment, and PAA Consent to be substantially in
the form of Exhibit E hereto and the Engine Warranty Assignment and the
Engine Manufacturer's Consent to be in substantially the form of
Exhibit F hereto, in each case, as amended or modified on or before the
Delivery Date in accordance with the terms hereof.
WHEREAS, on the Delivery Date pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment, the PAA
Consent, the Engine Warranty Assignment, the Engine Manufacturer's Consent, the
FAA ▇▇▇▇ of Sale, and the Warranty ▇▇▇▇ of Sale, the Owner Trustee will
purchase, and receive title to, the Aircraft from the Seller and lease the
Aircraft to the Lessee pursuant to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule I hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS-THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On the Pass-Through Closing Date: (i) the Lessee shall direct the
Placement Agent to execute a wire transfer or intra-bank transfer to the
Pass-Through Trustee in the amount of the total proceeds payable pursuant to the
Placement Agreement with respect to the Pass-Through Certificates, and (ii) the
Pass-Through Trustee shall deliver the Pass-Through Certificates to the
Placement Agent upon receipt by the Pass-Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set forth
herein, on the Certificate Closing Date, on behalf of each Pass-Through Trust,
from an allocable amount of the proceeds of the sale of the related Pass-Through
Certificates, the Pass-Through Trustee shall purchase the Certificates specified
for such Pass-Through Trust on Schedule II hereto. For each Pass-Through Trust,
the Pass-Through Trustee shall pay an amount equal to the principal amount of
Certificates of the Series and Maturity that relates to such Pass-Through Trust,
which amounts in the aggregate shall equal the aggregate principal amount of the
Certificates as specified in Section 2.04 of the Indenture. The aggregate amount
payable by the Pass-Through Trustee pursuant to this Section 2.01(b) shall be
payable by wire transfer or intra-bank transfer to the Indenture Trustee on
behalf of the Owner Trustee.
(c) On the Certificate Closing Date, the Indenture Trustee shall, on
behalf of the Owner Trustee, deposit, by wire transfer or intra-bank transfer,
the amounts received by it pursuant to Section 2.01(b) hereof in the Collateral
Account pursuant to the Indenture.
(d) On or before the Certificate Closing Date, the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to the
execution and delivery of (if they are not parties thereto), the Indenture
(other than the Indenture Supplement), and the other documents listed in Section
4.01(d) hereof, and the Owner Trustee shall execute and deliver to the Indenture
Trustee for authentication, and the Indenture Trustee shall authenticate and
deliver to the Subordination Agent on behalf of the Pass-Through Trustee for
each of the Pass-Through Trusts, upon the request of the Owner Trustee, the
Certificates as provided in Section 2.02 hereof.
(e) The Closings shall take place at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇.
Section 2.02. Certificates. (a) Subject to the satisfaction or waiver
of the conditions set forth herein, on the Certificate Closing Date, the Initial
Owner Participant will instruct the Owner Trustee to execute and deliver to the
Indenture Trustee, and the Indenture Trustee shall authenticate and deliver,
upon the request of the Owner Trustee, to the Subordination Agent on behalf of
the Pass-Through Trustee for each of the Pass-Through Trusts, the Certificates
specified for such Pass-Through Trust on Schedule II hereto, which (i) shall be
issued in the principal amount and in the Series and Maturity set forth for such
Certificate in Schedule II hereto, (ii) shall bear interest at the interest rate
set forth for such Certificate in Schedule II hereto, (iii) shall be issued in
such form and on such terms as are specified in the Indenture, (iv) shall be
dated and authenticated on the Certificate Closing Date and shall bear interest
from the Certificate Closing Date and (v) shall be registered in the name of the
Subordination Agent on behalf of the Pass-Through Trustee for such Pass-Through
Trust.
(b) Transfer of Beneficial Interest. If on a date prior to the Delivery
Date, the Lessee shall have identified one or more Owner Participants ready,
willing and able to acquire the Beneficial Interest of the Initial Owner
Participant in consideration for such Owner Participant's or Owner Participants'
agreement to participate in the Lessor's payment of the Purchase Price for the
Aircraft on the Delivery Date as provided in Section 3.02(a) hereof, the Initial
Owner Participant shall transfer its Beneficial Interest to such Owner
Participant or Owner Participants on such date (the "Transfer Date"). On the
Delivery Date (or if earlier the Transfer Date), the document amendments
contemplated by Section 2.03 hereof (subject to the limitations set forth in
such Section) shall be effected and such amended documents delivered.
Section 2.03. Amendments on Delivery or Transfer Date. (a) Amendment
and Restatement of Certain Documents. Upon any transfer by the initial Owner
Participant of its Beneficial Interest on the Delivery Date (as contemplated by
Section 3.02(a) hereof (or, if earlier, the Transfer Date), the parties hereto
shall enter into amendments and restatements of the Trust Agreement, the Lease,
the Indenture and this Agreement, which amendments and restatements shall
reflect such changes as shall have been requested by the Owner Participant,
agreed to by the Lessee and, if modified in any material respect, as to which
Rating Agency Confirmation shall have been obtained from each Rating Agency by
the Lessee (to be delivered by the Lessee to the Pass Through Trustee on or
before the Delivery Date or the Transfer Date, as the case may be); provided,
however, that in any event such amended and restated documents shall not vary
the Mandatory Economic Terms and shall contain the Mandatory Document Terms.
The Lessee agrees to furnish to each Liquidity Provider and to Coudert
Brothers (the initial Liquidity Provider's special New York counsel) at its New
York office, attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, as soon as practicable prior to the
estimated Delivery Date (or, if earlier, the estimated Transfer Date), true and
complete copies of drafts of any such amended and restated Participation
Agreement, amended and restated Lease Agreement and amended and restated
Indenture. The Lessee further agrees to furnish to each Liquidity Provider and
to the counsel identified in the preceding sentence (i) each and every
subsequent draft of such documents and (ii) promptly following the execution
thereof, true and complete copies of such documents.
(b) Amendments to Certain Schedules. The schedule of principal payments
on the Certificates set forth in Section 6.06 of the Indenture and in the
Certificate on the Certificate Closing Date have been calculated based in part
upon a hypothetical owner's economic return and certain assumptions regarding
the Delivery Date, Transaction Costs, tax law, Basic Term and certain other
items (the "Assumptions"). If the Initial Owner Participant transfers its
Beneficial Interest to one or more Owner Participants on the Delivery Date (as
contemplated by Section 3.02(a) hereof (or, if earlier, the Transfer Date),
then, no later than 20 days following the Delivery Date (the "Initial
Reoptimization Date"), the Owner Trustee may elect to amend such schedule of
principal payments to reflect the actual Owner's or Owners' Economic Return and
any changes to the Assumptions, subject to the restrictions set forth below. On
the Initial Reoptimization Date the Owner Trustee shall deliver and the
Subordination Agent on behalf of the Pass Through Trustee of each Pass Through
Trust shall accept delivery of an amended Schedule I to each Certificate
containing such changed principal installments.
The Owner Trustee will give not less than 10 days' notice of the
Initial Reoptimization Date. Any amendments to the Indenture and such Schedule
shall not vary the Mandatory Economic Terms and on the Initial Reoptimization
Date the Lessee shall deliver a certificate to the Pass Through Trustee and the
Liquidity Providers signed by the Vice President and Treasurer or any other
authorized officer of the Lessee certifying to such effect. If the Initial
Reoptimization Date occurs later than the Delivery Date, the Lessee shall cause
any required filing and recording of the affected documents with the Aeronautics
Authority to be effected on the Initial Reoptimization Date.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees to
give the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee and the Liquidity Providers at least three Business Days'
written or facsimile notice prior to the Delivery Date (which notice shall be
effective only if received not later than 12:00 noon (New York City time) on the
date that is at least three Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the amount of
the Owner Participant's Commitment, the Debt Portion, the Delivery Date for the
Aircraft, the serial number of the Airframe and each Engine, and the Aeronautics
Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) subject to the proviso to this Section
3.02(a), the Indenture Trustee agrees to release the Debt Portion or such lesser
amount as may then be held in the Collateral Account together with the Lessee
Shortfall (as defined in clause (iii) below), if any, to the Owner Trustee for
application to the Purchase Price as provided below, (ii) unless previously
transferred on the Transfer Date, the Initial Owner Participant agrees to
transfer its Beneficial Interest to the Owner Participant in consideration for
the Owner Participant's participation in the Lessor's payment of the Purchase
Price through an investment in the beneficial ownership of the Lessor's Estate
in an amount equal to the Purchase Price minus the Debt Portion, (iii) subject
to the proviso to this Section 3.02(a), the Lessee agrees to pay to the
Indenture Trustee the excess, if any, of (I) the Debt Portion over (II) such
amount as may then be held in the Collateral Account (the "Lessee Shortfall") as
provided in Section 17.02(a) hereof, and (iv) the Seller shall sell the Aircraft
to the Owner Trustee and the Owner Trustee shall immediately thereafter lease
the Aircraft to the Lessee pursuant to the Lease. In consideration for the
assignment to the Owner Trustee by the Lessee under the Purchase Agreement
Assignment of the Lessee's right to purchase the Aircraft, the transfer by the
Initial Owner Participant to the Owner Participant of its Beneficial Interest
and the transfer of title to the Aircraft from the Seller to the Owner Trustee,
the following cash payments will be made by wire transfer of immediately
available funds on the Delivery Date: (A) by the Owner Trustee to the Seller, an
amount equal to the remaining balance due to the Seller for the Aircraft, as
evidenced by the Invoice, (B) by the Owner Trustee to the Lessee, an amount
equal to the Purchase Price minus the cash payment to the Seller pursuant to
clause (A) above and (C) by the Indenture Trustee, on behalf of the Owner
Trustee, to the Lessee the excess of any amounts as may then be held in the
Collateral Account over the Debt Portion.
(b) Reserved.
(c) No Obligation to Increase Commitments; Delayed Delivery. (i) If the
Indenture Trustee shall default in its obligation to make the amount of its Debt
Portion available pursuant hereto, the Owner Participant shall have no
obligation to make any portion of such Debt Portion available or to increase the
amount of its Commitment, but the obligations of the Owner Participant shall
remain subject to the terms and conditions of this Agreement.
(ii) Subject to the provisions of Section 3.05 hereof, if the closing
of the transactions contemplated by the Operative Agreements shall not have been
consummated by 2:00 p.m. (New York City time), or such earlier time as directed
by the Lessee, on the Scheduled Delivery Date, the Owner Trustee shall, if
instructed in writing by the Lessee, at the expense of the Lessee, use its
reasonable best efforts to cause the Owner Participant's Commitment to be
invested and reinvested to the extent practicable at the direction received by
it from the Lessee (with a copy to the Owner Participant), at the risk of the
Lessee, in Permitted Investments consisting of either commercial paper or time
deposits; provided, however, that in the absence of instructions by 2:00 p.m.
(New York City time) the Owner Trustee shall use its reasonable [best] efforts
to cause such amount or the proceeds thereof to be invested and reinvested to
the extent practicable in overnight Eurodollar time deposits. Earnings on any
such investments shall be applied to the Lessee's payment obligations, if any,
to such Owner Participant pursuant to the last two paragraphs of this Section
3.02, and the balance, if any, of such earnings remaining after such application
shall be paid in accordance with the Lessee's written instructions.
If for any reason (i) the Operative Agreements shall not be executed
and delivered by the respective parties thereto and/or the delayed Delivery Date
shall not occur (whether by reason of a failure to meet a condition precedent
thereto set forth in Article 4 hereof or otherwise) on or before the third
Business Day after the Scheduled Delivery Date (or earlier if requested by the
Owner Participant) or, if earlier, the Cut-Off Date, or (ii) the Lessee has
notified the Owner Trustee (with a copy to the Owner Participant) prior to 2:00
p.m. (New York City time) on any date after the Scheduled Delivery Date that it
does not intend to go forward to close the transactions contemplated hereby for
such Delivery Date, the Owner Participant may cancel any funding arrangements
made to fund its Commitment on the Scheduled Delivery Date but the Owner
Participant's Commitment hereunder with respect to the Aircraft shall not be
terminated thereby until the Cut-off Date, whereupon the Owner Participant's
Commitment hereunder shall terminate. On such third Business Day (or such
earlier date) or the Cut-Off Date, as the case may be, or the earliest
practicable Business Day thereafter, the Owner Trustee shall return the amounts
held by it hereunder on behalf of the Owner Participant to the Owner
Participant, provided that the Owner Trustee shall have had a reasonable time to
liquidate any Permitted Investments it has been authorized to invest in pursuant
to the preceding paragraph and to obtain the proceeds therefrom in funds of the
type originally received, and the Lessee shall pay interest on such funds to the
Owner Participant at the Debt Rate, such interest to be payable for the period
from and including such Scheduled Delivery Date to but excluding the date such
funds are returned to the Owner Participant in accordance with the terms hereof;
provided that if any such funds are returned to the Owner Participant after 2:00
p.m. (New York City time) on any such date, such funds shall be deemed for
purposes of this paragraph to have been returned on the next succeeding Business
Day.
The Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 3.02(c). Further, the
Lessee shall indemnify the Owner Trustee and hold it harmless from and against
any cost or expense the Owner Trustee may incur as a result of any investment of
funds or transfer of funds referred to herein in accordance with the terms
hereof. The Owner Trustee shall not be liable for failure to invest such funds
except as otherwise provided herein or for any losses incurred on such
investments except for any losses arising out of its own gross negligence or
willful misconduct.
Section 3.03. Reserved.
Section 3.04. Reserved.
Section 3.05. Postponement of Delivery Date. (a) If no Owner
Participant has committed to participate in the transactions contemplated to
occur on the Scheduled Delivery Date or if an Owner Participant shall for any
reason fail or refuse to make the full amount of its Commitment available on the
Scheduled Delivery Date in accordance with the terms of Section 3.02 hereof, the
Owner Trustee will promptly give each party confirmed facsimile notice thereof
and the Lessee shall postpone the Delivery Date to a date not later than the
Cut-off Date. If no Owner Participant has committed to participate or an Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available in accordance with the terms of Section 3.02 hereof on such
postponed Delivery Date (in which event the Owner Participant's interest in the
Lessor's Estate shall be automatically reconveyed to the Lessee), the Lessee
shall endeavor during such period to identify another equity investor to whom it
can assign its Beneficial Interest. If the Lessee identifies an equity investor,
the Lessee shall assign its interest in the Lessor's Estate as provided above.
In case of any such conveyance (or any conveyance by the Lessee to another owner
participant on or prior to the Cut-Off Date) (but subject to the satisfaction of
the conditions precedent specified herein), the Indenture Trustee shall release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account for application to the payments contemplated in the last sentence of
Section 3.02(a) hereof. If no such equity investor is identified or if for any
reason other than the failure of the Seller to deliver the Aircraft, the Lessee
does not enter into the Lease and the Lease Supplement with the Owner Trustee on
or prior to the Cut-Off Date, the Lessee, the Indenture Trustee and the
Pass-Through Trustee agree that the Lessee shall purchase the Aircraft and
assume all the obligations of the Owner Trustee under the Certificates upon
satisfaction of the requirements set forth in Sections 4.02 and 7.11(b) (to the
extent applicable) hereof, and as otherwise necessary to reflect a full recourse
secured aircraft financing of the Lessee.
(b) Release of Obligations. If (i) the Seller fails to deliver the
Aircraft on or prior to the Cut-Off Date or (ii) the Lessee does not enter into
the Lease and the Lease Supplement and the conditions to the Lessee's assumption
of the Certificates pursuant to Section 3.05(a) have not been satisfied on or
prior to the Cut-Off Date, then, in such event, the Owner Trustee shall not
purchase the Aircraft from the Seller, and the parties to the Operative
Agreements shall have no further obligations or liabilities under any of the
Operative Agreements with respect to the Aircraft, including the obligation of
the Owner Participant to participate in the payment of the Purchase Price, and
such documents shall terminate and have no further force or effect with respect
to the Aircraft; provided, that the Lessee shall provide, no later than the
Cut-Off Date, notice of prepayment to the Indenture Trustee and the Certificates
shall be prepaid on the 15th day following the Cut-Off Date as provided in
Section 6.02(a)(vi) of the Indenture and Section 17.02(c) hereof and provided
further, that (i) the Lessee's obligation to pay any Transaction Costs as
provided in Section 3.04 hereof (to the extent such section is applicable) and
to indemnify such parties to the extent provided in such documents, shall not be
diminished or modified in any respect and (ii) the obligations of the Owner
Trustee, the Indenture Trustee and the Lessee to return funds and pay interest,
costs, expenses and other amounts thereon or in respect thereof as provided in
Section 3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of Section
3.02(c) hereof, the Scheduled Delivery Date may be postponed from time to time
(but in no event shall the Delivery Date be later than the Cut-Off Date) for any
reason, other than pursuant to Section 3.05(a) hereof, if the Lessee gives the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee and the Liquidity Providers confirmed facsimile notice (or telephone
notice followed by written confirmation) of such postponement and notice of the
date to which the Delivery Date has been postponed, such notice of postponement
to be received by each party no later than 11:00 a.m. (New York City time) on
the Business Day preceding the Scheduled Delivery Date.
Section 3.06. Closing. The closing with respect to the purchase and
lease of the Aircraft on the Delivery Date shall take place at the offices of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or such
other place as the Lessee, the Owner Participant and the Indenture Trustee shall
mutually agree.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date). The
obligations of the Owner Trustee, the Lessee, the Initial Owner Participant, the
Indenture Trustee, the Subordination Agent and the Pass-Through Trustee on
behalf of each Pass-Through Trust to participate in the transactions
contemplated hereby on the Certificate Closing Date are subject to the
fulfillment to the reasonable satisfaction of such party (or waiver by such
party), prior to or on the Certificate Closing Date, of the following conditions
precedent (it being understood that receipt by the Lessee of any of the
following documents shall not be a condition precedent to the obligations of any
party):
(a) Certificates. (i) On the Certificate Closing Date, there
shall have been duly issued and delivered by the Owner Trustee to the
Subordination Agent on behalf of the Pass-Through Trustee for each
Pass-Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Certificate Closing Date and registered in the
name of the Subordination Agent, in the principal amounts, Series and
Maturity, bearing the interest rate and otherwise as provided in
Section 2.04 of the Indenture, and (ii) on the Certificate Closing
Date, the "Certificates" (as defined in each of the Related Indentures)
have been duly issued and delivered by the "Owner Trustee" (as defined
in each of the Related Indentures) to the Subordination Agent on behalf
of the Pass-Through Trustee for each Pass-Through Trust.
(b) Legal Investment. On the Certificate Closing Date, no fact
or condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable
regulatory authorities, which, in the opinion of the Pass-Through
Trustee, the Subordination Agent, or the Indenture Trustee, would make
it illegal for the Initial Owner Participant, the Lessee, the Owner
Trustee, the Pass-Through Trustee, the Subordination Agent or the
Indenture Trustee, and no change in circumstances shall have occurred
which would otherwise make it illegal or otherwise in contravention of
guidance issued by regulatory authorities for the Initial Owner
Participant, the Lessee, the Owner Trustee, the Pass-Through Trustee,
the Subordination Agent or the Indenture Trustee, to participate in the
transactions to be consummated on the Certificate Closing Date; and no
action or proceeding shall have been instituted nor shall governmental
action before any court, governmental authority or agency be threatened
which in the opinion of counsel for the Indenture Trustee, the
Subordination Agent or the Pass-Through Trustee is not frivolous, nor
shall any order have been issued or proposed to be issued by any court,
or governmental authority or agency, as of the Certificate Closing
Date, to set aside, restrain, enjoin or prevent the consummation of any
of the transactions contemplated by this Agreement or by any of the
other Operative Agreements.
(c) Placement Agent. The Placement Agent shall have
transferred the funds specified in Section 2.01(a) hereof and all
conditions with respect thereto shall have been satisfied or waived.
(d) Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the
respective party or parties thereto, shall each be reasonably
satisfactory in form and substance to the Lessee, the Owner Trustee,
the Indenture Trustee, the Pass-Through Trustee (each acting directly
or by authorization to its special counsel) and shall each be in full
force and effect; there shall not have occurred any default thereunder,
or any event which with the lapse of time or the giving of notice or
both would be a default thereunder, and copies executed or certified as
requested by the Lessee, the Owner Trustee, the Indenture Trustee, the
Pass-Through Trustee or the Subordination Agent, as the case may be, of
such documents shall have been delivered to the Lessee, the Indenture
Trustee, the Pass-Through Trustee, the Subordination Agent and the
Owner Trustee (provided, that the sole chattel-paper original of the
Lease shall be delivered to the Indenture Trustee):
(i) the Indenture;
(ii) the Trust Agreement;
(iii) the ACA Guaranty;
(iv) the Intercreditor Agreement;
(v) the Liquidity Facility for each of the Pass-Through
Trusts for the Series A Certificates, the Series B
Certificates and the Series C Certificates.
(e) Approvals. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee or ACA Inc.,
which in the opinion of the Owner Participant, the Pass-Through Trustee
or the Indenture Trustee are required in connection with any
transaction contemplated by this Agreement, shall have been duly
obtained.
(f) Financing Statements. Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) intended to be created by or pursuant to the Granting Clause
of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for
and on behalf of the Holders, for filing in Connecticut, and all other
actions shall have been taken which, in the opinion of the Pass-Through
Trustee and the Placement Agent, are necessary to perfect and protect
such security interests and other interests.
(g) Corporate Documents. Except when such Person is the
delivering party, the Owner Trustee, the Pass-Through Trustee, the
Lessee and the Indenture Trustee (acting directly or by authorization
to its counsel) shall have received the following, in each case in form
and substance reasonably satisfactory to it:
(i) a copy of the certificate of incorporation and
by-laws of the Lessee, certified by the Secretary or an
Assistant Secretary of the Lessee and ACA Inc. as of the
Certificate Closing Date, and a copy of a resolution adopted
by the board of directors of the Lessee, certified as such as
of the Certificate Closing Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the
Aircraft and the execution, delivery and performance by the
Lessee of this Agreement, the Indenture, a lease with respect
to the Aircraft, the Pass-Through Agreement, and agreements
related thereto to which the Lessee is or is to be a party and
each other document to be executed and delivered by the Lessee
in connection with the transactions contemplated hereby and a
copy of the resolutions of the board of directors of ACA Inc.,
certified as such as of the Certificate Closing Date by the
Secretary or an Assistant Secretary, authorizing the execution
and delivery by ACA Inc. of the ACA Guaranty and the other
Operative Agreements to which ACA Inc. is or is to be a party
and each other document to be executed and delivered by ACA
Inc. in connection with the transactions contemplated hereby;
(ii) a copy of the articles of incorporation and
by-laws and other instruments of the Owner Trustee, certified
by the Secretary or an Assistant Secretary of the Owner
Trustee as of the Certificate Closing Date (or other like
instruments satisfactory to the Lessee and the Initial Owner
Participant) and evidence authorizing the execution, delivery
and performance by the Owner Trustee in its individual
capacity or as Owner Trustee, as the case may be, of this
Agreement, the Trust Agreement and each of the other Operative
Agreements to which it is or is to be a party, whether in its
individual capacity or as Owner Trustee, and each other
document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iii) a copy of the articles of association and
by-laws and other instruments of the Indenture Trustee,
certified by the Secretary or an Assistant Secretary of the
Indenture Trustee as of the Certificate Closing Date (or other
like instruments satisfactory to the Lessee and the Initial
Owner Participant) and evidence authorizing the execution,
delivery and performance by the Indenture Trustee of each of
this Agreement, the Indenture and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Indenture Trustee
in connection with the transactions contemplated hereby;
(iv) a copy of the articles of association and
by-laws and other instruments of the Pass-Through Trustee,
certified by the Secretary or an Assistant Secretary of the
Pass-Through Trustee as of the Certificate Closing Date (or
other like instruments satisfactory to the Lessee and the
Initial Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass-Through
Trustee of this Agreement, the Pass-Through Agreement, and
each of the other Operative Agreements to which it is or is to
be a party, and each other document to be executed and
delivered by the Pass-Through Trustee in connection with the
transactions contemplated hereby;
(v) a copy of the articles of association and by-laws
and other instruments of the Subordination Agent, certified by
the Secretary or an Assistant Secretary of the Subordination
Agent as of the Certificate Closing Date (or other like
instruments satisfactory to the Lessee and the Initial Owner
Participant) and evidence authorizing the execution, delivery
and performance by the Subordination Agent of this Agreement,
the Intercreditor Agreement and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Subordination
Agent in connection with the transactions contemplated hereby;
and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, and the Pass-Through Trustee as the Initial
Owner Participant, the Indenture Trustee or the Pass-Through
Trustee may reasonably request in order to establish the
consummation of the transactions contemplated by this
Agreement.
(h) Officer's Certificate of Lessee and ACA Inc. On the
Certificate Closing Date, the following statements shall be true, and
the Owner Trustee, the Pass-Through Trustee, the Liquidity Providers
and the Indenture Trustee shall have received a certificate of the
Lessee and of ACA Inc. signed on its respective behalf by the Vice
President and Treasurer or any other duly authorized officer of the
Lessee or ACA Inc., as applicable, dated the Certificate Closing Date,
stating that:
(i) the representations and warranties of the Lessee
and ACA Inc., as the case may be, contained in the Operative
Agreements to which it is a party and in any certificate
delivered pursuant hereto or thereto are true and correct on
and as of the Certificate Closing Date as though made on and
as of such date (except to the extent that such
representations and warranties relate solely to an earlier
date, in which case such certificate shall state that such
representations and warranties were true and correct on and as
of such earlier date);
(ii) except as disclosed in the Offering Memo, no
materially adverse change has occurred in the financial
condition, business or operations of the Lessee or ACA Inc.
from that shown in the unaudited financial statements of the
Lessee and ACA Inc. as of July 31, 1997, and nothing has
occurred which will, in the judgment of such officer,
materially adversely affect the ability of the Lessee or ACA
Inc., as the case may be, to carry on its business or to
perform its obligations under this Agreement and each other
Operative Agreement to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or
would result from the purchase, sale, mortgage, or lease of
the Aircraft, which constitutes an Event of Loss (or event
which with the passage of time would become an Event of Loss)
with respect to the Airframe or any Engine, or a Default under
the Lease.
(i) Reserved.
(j) Other Officer's Certificates. On the Certificate Closing
Date, the following statements shall be true, and the Lessee, the
Pass-Through Trustee, the Liquidity Providers, the Owner Trustee, the
Subordination Agent and the Indenture Trustee shall have received a
certificate from each of SSB and the Owner Trustee (in the case of the
Lessee, the Pass-Through Trustee, the Subordination Agent and the
Indenture Trustee), FNBM and the Indenture Trustee (in the case of the
Lessee, the Pass-Through Trustee, the Subordination Agent and the Owner
Trustee), FNBM and the Pass-Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Subordination Agent and the Owner Trustee),
and FNBM and the Subordination Agent (in the case of the Lessee, the
Pass-Through Trustee, the Indenture Trustee and the Owner Trustee),
signed by a duly authorized officer of SSB and FNBM, respectively,
dated the Certificate Closing Date, stating with respect to SSB and the
Owner Trustee, with respect to FNBM and the Indenture Trustee, with
respect to FNBM and the Pass-Through Trustee, or with respect to FNBM
and the Subordination Agent, as the case may be, that:
(i) the representations and warranties of SSB in its
individual capacity and as Owner Trustee, of FNBM in its
individual capacity and as Indenture Trustee, of FNBM in its
individual capacity and as Pass-Through Trustee, or of FNBM in
its individual capacity and as Subordination Agent contained
in this Agreement, the Lease, the Trust Agreement and the
Indenture and in any certificate delivered pursuant hereto or
thereto are true and correct on and as of the Certificate
Closing Date as though made on and as of such date (except to
the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate
shall state that such representations and warranties were true
and correct on and as of such earlier date);
(ii) to the best of its knowledge, no Default or
Indenture Default exists due to any action or omission on the
part of SSB in its individual capacity or as Owner Trustee, of
FNBM in its individual capacity or as Indenture Trustee, of
FNBM in its individual capacity or as Pass-Through Trustee, or
of FNBM in its individual capacity or as Subordination Agent;
and
(iii) there are no Lessor's Liens attributable to the
Owner Trustee or SSB and no Indenture Trustee's Liens.
(k) Legal Opinions. The Placement Agent, the Lessee, the Owner
Trustee, the Pass-Through Trustee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have
received from the following counsel their respective legal opinions in
each case reasonably satisfactory to the Placement Agent, the Lessee,
the Owner Trustee, the Pass-Through Trustee or the Indenture Trustee,
as the case may be, as to scope and substance (and covering such other
matters as the recipient may reasonably request) and dated the
Certificate Closing Date:
(i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and General
Counsel of the Lessee and ACA Inc., in the form of Exhibit
A(l)(a)(i) hereto and addressed to the Placement Agent, the
Owner Trustee, the Pass-Through Trustee, each Liquidity
Provider and the Indenture Trustee;
(ii) Ober, Kaler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel
for the Indenture Trustee, in the form of Exhibit A(3) hereto
and addressed to the Placement Agent, the Indenture Trustee,
the Owner Trustee, the Pass-Through Trustee, each Liquidity
Provider and the Lessee;
(iii) ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for
the Owner Trustee, in the form of Exhibit A(4)(a)(i) hereto
and addressed to the Placement Agent, the Indenture Trustee,
the Owner Trustee, the Pass-Through Trustee, each Liquidity
Provider and the Lessee;
(iv) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special leasing counsel
for the Lessee, and of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special
securities counsel to the Lessee, in the forms attached as
Exhibit A(l)(b)(i) hereto and addressed to the Placement
Agent, the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Lessee;
(v) Ober, Kaler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ special counsel for
the Pass-Through Trustee and the Subordination Agent, in the
form of Exhibit A(5) hereto addressed to the Placement Agent,
the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee; and
(vi) ▇▇▇▇▇▇▇▇ Chance, special Dutch counsel to ING
Bank N.V. in the form of Exhibit A(6)(a) hereto, and Coudert
Brothers, special counsel for the Liquidity Providers, in the
form of Exhibit A(6)(b) hereto, each addressed to the
Pass-Through Trustee, the Subordination Agent, each Liquidity
Provider and the Lessee.
(l) No Indenture Default. No Indenture Default exists.
(m) No Lease Default or Event of Loss. No Default exists, and
no Event of Loss, or event which with the passage of time would
constitute an Event of Loss, shall exist.
(n) Other Agreements. The Lessee and the Pass-Through Trustee
shall have entered into the Pass-Through Agreement, all conditions to
the effectiveness of each thereof shall have been satisfied or waived,
and the Pass-Through Certificates shall have been issued. The Lessee
and the Placement Agent shall have entered into the Placement
Agreement, all conditions to the effectiveness thereof shall have been
satisfied or waived, and the Pass-Through Certificates shall have been
delivered pursuant to the Placement Agreement. All conditions to the
effectiveness of each Liquidity Facility shall have been satisfied or
waived.
(o) Payment of Taxes. (A) All taxes, fees, charges,
assessments, costs and other expenses then due and payable in
connection with the execution, delivery, recording and filing of all
financing statements referred to in subparagraph (f) of this Section
4.01, or in connection with the issuance of the Certificates shall have
been duly paid or caused to be paid in full; and (B) all sales or use
taxes and duties related to the consummation of the transactions
contemplated by the Operative Agreements on the Certificate Closing
Date which are then due and payable shall have been duly paid in full.
(p) Governmental Compliance. All appropriate action required
to have been taken by the FAA, the SEC, or any governmental or
political agency, subdivision or instrumentality of the United States,
prior to the Certificate Closing Date in connection with the
transactions contemplated by this Agreement shall have been taken, and
all orders, permits, waivers, authorizations, exemptions and approvals
(collectively "permits") of such entities required to be in effect on
the Certificate Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
permits shall be in full force and effect on the Certificate Closing
Date.
(q) Section 131.3 of the New York State Banking Law Filing.
SSB shall have delivered evidence of its filing made with the New York
Superintendent of Banking pursuant to Section 131.3 of the New York
State Banking Law.
(r) Letter of Credit. The Lessee shall have delivered the
Letter of Credit to the Indenture Trustee in connection with the
obligations of the Lessee pursuant to the first sentence of Section
17.02(h) hereof.
Section 4.02. Conditions Precedent (Delivery Date). Subject to the last
paragraph of this Section 4.02, the obligations of the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent and the Pass-Through
Trustee on behalf of each Pass-Through Trust to participate in the transactions
contemplated hereby on the Delivery Date are subject to the fulfillment to the
reasonable satisfaction of each party (or waiver by such party), prior to or on
the Delivery Date, of the following conditions precedent (it being understood
that receipt by the Lessee of any of the following documents shall not be a
condition precedent to the obligation of any party):
(a) Notice, Etc. Each party hereto shall have received a
Delivery Notice pursuant to Section 3.01 hereof at least three Business
Days prior to the Delivery Date.
(b) Legal Investment. No change shall have occurred after the
Certificate Closing Date (or, in the case of the Owner Participant, the
Transfer Date) and on or prior to the Delivery Date in applicable laws
or regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant, the Pass-Through Trustee, the Subordination Agent, or the
Indenture Trustee, would make it illegal for the Owner Participant, the
Lessee, the Owner Trustee, the Pass-Through Trustee, the Subordination
Agent or the Indenture Trustee, and no change in circumstances shall
have occurred which would otherwise make it illegal or otherwise in
contravention of guidance issued by regulatory authorities for the
Owner Participant, the Lessee, the Owner Trustee, the Pass-Through
Trustee, the Subordination Agent or the Indenture Trustee, to
participate in the transactions to be consummated on the Delivery Date;
and no action or proceeding shall have been instituted nor shall
governmental action before any court, governmental authority or agency
be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee, the Subordination Agent or the
Pass-Through Trustee is not frivolous, nor shall any order have been
issued or proposed to be issued by any court, or governmental authority
or agency, as of the Delivery Date, to set aside, restrain, enjoin or
prevent the consummation of any of the transactions contemplated by
this Agreement or by any of the other Operative Agreements.
(c) Documents. The documents referred to in Section 4.01(d)
hereof shall each be in full force and effect and the following
documents shall have been duly authorized, executed and delivered by
the respective party or parties thereto, shall each be reasonably
satisfactory in form and substance to the Lessee, the Owner Trustee,
the Indenture Trustee, the Pass-Through Trustee, the Subordination
Agent and the Owner Participant (each acting directly or by
authorization to its special counsel) and shall each be in full force
and effect; there shall not have occurred any default thereunder, or
any event which with the lapse of time or the giving of notice or both
would be a default thereunder, and copies executed or certified as
requested by the Lessee, the Owner Trustee, the Indenture Trustee, the
Pass-Through Trustee or the Owner Participant, as the case may be, of
such documents shall have been delivered to the Owner Participant, the
Lessee, the Indenture Trustee, the Pass-Through Trustee and the Owner
Trustee (provided, that the sole chattel-paper original of the Lease
(whether delivered on the Transfer Date or the Delivery Date) and the
Lease Supplement shall be delivered to the Indenture Trustee):
(i) this Agreement, as amended and restated as of the Delivery Date;
(ii) the Lease;
(iii) the Trust Agreement, as amended and restated as of the
Delivery Date;
(iv) the Indenture, as amended and restated as of the Delivery Date;
(v) the Lease Supplement covering the Aircraft, dated the Delivery Date;
(vi) the Indenture Supplement covering the Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax
Indemnity Agreement (unless delivered on the Transfer
Date);
(viii) the Invoice;
the FAA ▇▇▇▇ of Sale and the Warranty ▇▇▇▇ of Sale;
the Purchase Agreement Assignment;
(xi) the PAA Consent;
the Engine Warranty Assignment;
the Engine Manufacturer's Consent;
in the case of the Owner Participant only, the RVG;
in the case of the Owner Participant only, the Deficiency Agreement;
the Owner Participant Guaranty, if any; and
(xvii) the Old Lease Termination;
unless, in the case of each of the documents listed in clauses (i)
through (iv) above they shall have been amended and restated as of and
delivered on the Transfer Date.
(d) Legal Opinions. The Owner Participant, the Placement
Agent, the Lessee, the Owner Trustee, the Pass-Through Trustee and the
Indenture Trustee (acting directly or by authorization to its special
counsel) shall have received from the following counsel their
respective legal opinions in each case reasonably satisfactory to the
Owner Participant, the Placement Agent, the Lessee, the Owner Trustee,
the Pass-Through Trustee or the Indenture Trustee, as the case may be,
as to scope and substance (and covering such other matters as the
recipient may reasonably request) and dated the Delivery Date:
(i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and General Counsel of the Lessee and ACA
Inc., addressed to the Placement Agent, the Owner Participant, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Indenture Trustee;
(ii) special leasing counsel for the Lessee addressed
to the Placement Agent, the Owner Participant, the Indenture
Trustee, the Owner Trustee, the Pass-Through Trustee, each
Liquidity Provider and the Lessee;
(iii) special counsel for the Owner Trustee addressed
to the Placement Agent, the Owner Participant, the Indenture
Trustee, the Owner Trustee, the Pass-Through Trustee, each
Liquidity Provider and the Lessee;
(iv) special aviation counsel, in customary form and
addressed to the Placement Agent, the Owner Participant, the
Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
special counsel for the Manufacturer addressed to the Placement
Agent, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
counsel for the Engine Manufacturer addressed to the Placement
Agent, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass-through
Trustee, each Liquidity Provider and the Lessee;
(vii) in the case of the Owner Participant only, tax
counsel to the Owner Participant, addressed to the Owner
Participant, with respect to tax matters;
(viii) special counsel for the Manufacturer addressed
to the Owner Participant;
(ix) special counsel for SDIQ addressed to the Owner
Participant and the Owner Trustee; and
(x) special counsel for the Owner Participant and the
Owner Participant Guarantor, if any, and the General Counsel's
Office of the Owner Participant and the Owner Participant, if
any, addressed to the Placement Agent, the Owner Participant,
the Indenture Trustee, the Owner Trustee , the Pass-Through
Trustee, each Liquidity Provider and the Lessee.
(e) Title, Airworthiness and Registration. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Indenture
Trustee, the Pass-Through Trustee and the Owner Trustee shall have received
evidence from the Lessee reasonably satisfactory to the Owner Participant, the
Indenture Trustee, the Pass-Through Trustee and the Owner Trustee to the effect
that:
(i) the Owner Trustee has good and marketable title
(subject to filing and recording of the FAA ▇▇▇▇ of Sale with
the Aeronautics Authority) to the Aircraft, free and clear of
Liens, except the rights of the Owner Trustee and the Lessee
under the Lease, the rights of the Indenture Trustee under the
Indenture (including the Indenture Supplement), the beneficial
interest of the Owner Participant created by the Trust
Agreement, and the interest of the Certificate Holders created
by the Indenture, which evidence shall include the FAA ▇▇▇▇ of
Sale and the Warranty ▇▇▇▇ of Sale;
(ii) the Aircraft has been duly certificated by the
Aeronautics Authority as to type and airworthiness;
(iii) the Old Lease Termination (if applicable and if
the Old Lease was filed of record with the FAA), the FAA ▇▇▇▇
of Sale, the amended and restated Lease (including the Lease
Supplement), the amended and restated Indenture (including the
Indenture Supplement), and the amended and restated Trust
Agreement shall have been duly filed for recordation (or shall
be in the process of being so duly filed for recordation) with
the FAA pursuant to the Transportation Code; and
(iv) application to the FAA for registration of the
Aircraft in the name of the Owner Trustee shall have been duly
filed and the Lessee shall have permanent authority to operate
the Aircraft.
(f) Financing Statements. (i) a form UCC-3 financing statement
to amend and restate each financing statement referred to in Section
4.01(f) hereof shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, and
a form UCC-1 financing statement covering all the security interests
(and other interests) created by or pursuant to the Granting Clause of
the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for
and on behalf of the Holders, and (ii) a UCC notice filing describing
the Lease as a lease shall have been executed and delivered by the
Owner Trustee, as lessor, and the Lessee, as lessee (which filing shall
name the Indenture Trustee as assignee of the Owner Trustee), for
filing in Virginia.
(g) Payments. The Owner Participant shall have made available
its Commitment to the Owner Trustee, and the other payments
contemplated by Section 3.02 hereof shall have been made and interest
accrued on the Certificates prior to (but excluding) the Delivery Date
shall have been paid on or before the Delivery Date in accordance with
Section 17.02 hereof.
(h) Report of Aircraft Expert. The Owner Participant shall
have received a report prepared by BK Associates, Inc., addressed to
the Owner Participant (with an abbreviated report to the Lessee), in
form and substance reasonably satisfactory to the Owner Participant to
the effect that, on the Delivery Date:
(i) (A) the estimated fair market value of the
Aircraft net of any cost to the Owner Participant or the Owner
Trustee of return at the end of the Basic Term and any Renewal
Term (determined without including in such value any increase
or decrease for inflation or deflation during the Term) is
equal to or greater than 20% of the Purchase Price and (B) at
least 20% of the useful economic life of the Aircraft will be
remaining at the end of the Basic Term and any Renewal Term;
(ii) the estimated useful life of the Aircraft is at least 125% of the Basic Term
and any Renewal Term;
(iii) the Purchase Price is no greater than the fair
market value of the Aircraft on the Delivery Date;
(iv) on the Delivery Date, the Aircraft will not
require any modifications, improvements or additions in order
to be rendered complete for its intended purpose by the
Lessee;
(v) the amount payable by the Lessee upon the
exercise of its purchase option pursuant to Section 16(a)(1)
of the Lease equals or exceeds the currently estimated Fair
Market Value of the Aircraft on such date (taking into account
inflation or deflation to such date); and
(vi) the Aircraft is not limited use property.
(i) Insurance. Each of the Indenture Trustee, the Pass-Through
Trustee, the Owner Trustee and the Owner Participant shall have
received such evidence as it reasonably deems appropriate, including,
without limitation, an independent insurance broker's report, together
with certificates of insurance from such broker, in form and substance
reasonably satisfactory to the Indenture Trustee, the Pass-Through
Trustee, the Owner Trustee and the Owner Participant, to establish that
the insurance required by Section 12 of the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges,
assessments, costs and other expenses then due and payable in
connection with the execution, delivery, recording and filing of all
financing statements and the documents and instruments referred to in
subparagraphs (e) and (f) of this Section 4.02, or in connection with
the purchase of the Aircraft by the Owner Trustee and the making by the
Owner Participant of its equity investment shall have been duly paid or
caused to be paid in full; and (B) all sales or use taxes and duties
related to the consummation of the transactions contemplated by the
Operative Agreements on the Delivery Date which are then due and
payable shall have been duly paid in full.
(k) No Indenture Default. No Indenture Default exists.
(l) No Lease Default or Event of Loss. No Default exists, and
no Event of Loss, or event which with the passage of time would
constitute an Event of Loss, shall exist.
(m) Governmental Compliance. All appropriate action required
to have been taken by the FAA, the SEC, or any governmental or
political agency, subdivision or instrumentality of the United States,
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders,
permits, waivers, authorizations, exemptions and approvals
(collectively "permits") of such entities required to be in effect on
the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been issued, and all such permits shall be in
full force and effect on the Delivery Date.
(n) Officer's Certificate of Lessee and ACA Inc. On the
Delivery Date, the following statements shall be true, and the Owner
Participant, the Owner Trustee, the Pass-Through Trustee and the
Indenture Trustee shall have received a certificate of the Lessee and
of ACA Inc., signed on its respective behalf by the Vice President and
Treasurer or any other duly authorized officer of the Lessee or ACA
Inc., as applicable, dated the Delivery Date, stating that:
(i) the representations and warranties of the Lessee
or ACA Inc., as the case may be, contained in the Operative
Agreements to which it is a party (excluding the Tax Indemnity
Agreement) and in any certificate delivered pursuant hereto or
thereto are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that
such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on
and as of such earlier date);
(ii) except as disclosed in the Offering Memo, no
materially adverse change has occurred in the financial
condition, business, or operations of the Lessee or ACA Inc.
from that shown in the unaudited financial statements of the
Lessee and ACA Inc. as of July 31, 1997, and nothing has
occurred which will, in the reasonable judgment of such
officer, materially adversely affect the ability of the Lessee
or ACA Inc., as the case may be, to carry on its business or
to perform its obligations under this Agreement and each other
Operative Agreement to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or
would result from the purchase, sale, mortgage, or lease of
the Aircraft, which constitutes an Event of Loss (or event
which with the passage of time would become an Event of Loss)
with respect to the Airframe or any Engine, or a Default under
the Lease.
(o) Officer's Certificate of Owner Participant and any Owner
Participant Guarantor. On the Delivery Date, the following statements
shall be true, and the Lessee, the Pass-Through Trustee, the Owner
Trustee and the Indenture Trustee shall have received a certificate
from the Owner Participant, signed by a duly authorized officer of (aa)
the Owner Participant dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement
and any other Operative Agreement (excluding the Tax Indemnity
Agreement) to which it is a party and in any certificate
delivered pursuant hereto or thereto, are true and correct on
and as of the Delivery Date as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case
such certificate shall state that such representations and
warranties were true and correct on and as of such earlier
date);
(ii) no Lessor's Liens attributable to the Owner Participant exist; and
(iii) no event has occurred and is continuing which
constitutes or, with notice or lapse of time or both would
constitute, an Indenture Event of Default other than an
Indenture Event of Default attributable to a Lease Event of
Default.
and (bb) from the Owner Participant Guarantor, if any, signed by a duly
authorized officer of such Owner Participant Guarantor dated the
Certificate Closing Date, stating that the representations and
warranties of such Owner Participant Guarantor contained in its Owner
Participant Guaranty and in any certificate delivered at the closing
pursuant thereto are true and correct on and as of the Certificate
Closing Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date).
(p) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the
Lessee, the Pass-Through Trustee, the Owner Trustee, the Subordination
Agent and the Indenture Trustee shall have received a certificate from
each of SSB and the Owner Trustee (in the case of the Lessee, the
Pass-Through Trustee, the Owner Participant, the Subordination Agent
and the Indenture Trustee), FNBM and the Indenture Trustee (in the case
of the Lessee, the Pass-Through Trustee, the Owner Participant, the
Subordination Agent and the Owner Trustee), FNBM and the Pass-Through
Trustee (in the case of the Lessee, the Indenture Trustee, the Owner
Participant, the Subordination Agent and the Owner Trustee), and FNBM
and the Subordination Agent (in the case of the Lessee, the Indenture
Trustee, the Owner Participant, the Pass-Through Trustee and the Owner
Trustee), signed by a duly authorized officer of SS and FNBM,
respectively, dated the Delivery Date, stating with respect to SSB and
the Owner Trustee, with respect to FNBM and the Indenture Trustee, with
respect to FNBM and the Pass-Through Trustee, or with respect to FNBM
and the Subordination Agent, as the case may be, that:
(i) the representations and warranties of SSB in its
individual capacity and as Owner Trustee, of FNBM in its
individual capacity and as Indenture Trustee, of FNBM in its
individual capacity and as Pass-Through Trustee, or of FNBM in
its individual capacity and as Subordination Agent contained
in this Agreement, the Lease, the Trust Agreement and the
Indenture and in any certificate delivered pursuant hereto or
thereto are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that
such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on
and as of such earlier date);
(ii) to the best of its knowledge, no Default or
Indenture Default exists due to any action or omission on the
part of SSB in its individual capacity or as Owner Trustee, of
FNBM in its individual capacity or as Indenture Trustee, of
FNBM in its individual capacity or as Pass-Through Trustee, or
of FNBM in its individual capacity or as Subordination Agent;
and
(iii) there are no Lessor's Liens attributable to the
Owner Trustee or SSB and no Indenture Trustee's Liens
affecting the Trust Indenture Estate or the Lessor's Estate or
any part thereof.
(q) Release of Debt Portion. The Indenture Trustee shall have
released the Debt Portion from (or such lesser amount as may then be
held in) the Collateral Account.
(r) Officer's Certificate of Lessee Regarding Mandatory
Economic Terms and Mandatory Document Terms. On the Delivery Date, or
if earlier, the Transfer Date, in connection with the amendments
contemplated by Sections 2.03 and 2.04 hereof, the Lessee shall have
delivered a certificate to the Pass-Through Trustee and the Liquidity
Providers signed by the Vice President and Treasurer or any other duly
authorized officer of the Lessee stating that (i) the Operative
Agreements which are amended and restated as of the Delivery Date or
the Transfer Date, as the case may be, do not vary the Mandatory
Economic Terms and contain the Mandatory Document Terms and (ii) any
substantive modification of such documents from those in effect on the
Certificate Closing Date does not materially and adversely affect the
Holders of Pass-Through Certificates and each Liquidity Provider and
such certification shall be true and correct.
Notwithstanding anything else to the contrary in this Section 4.02, it shall not
be a condition precedent to the obligations of the Indenture Trustee, the
Pass-Through Trustee or the Subordination Agent that the conditions in Section
4.02(n) and (o) be satisfied if the Lessee certifies that the failure to fulfill
such condition precedent is not reasonably likely to materially adversely affect
the holders of Pass-Through Certificates and, in the event of such failure,
there has been delivered to the Indenture Trustee written confirmation from both
▇▇▇▇▇'▇ and S&P of the rating on any class of Pass-Through Certificates.
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.
Promptly upon the registration of the Aircraft and the filing and, where
appropriate, recordation pursuant to the Transportation Code, of the Old Lease
Termination (if the Old Lease was filed of record with the FAA), the FAA ▇▇▇▇ of
Sale, the Trust Agreement, the Lease (including the Lease Supplement), and the
Indenture (including the Indenture Supplement), the Lessee shall cause Special
Aviation Counsel to deliver to the Owner Participant, the Lessee, the Owner
Trustee, the Pass-Through Trustee and the Indenture Trustee an opinion as to (i)
the due registration of the Aircraft in the name of the Owner Trustee, (ii) the
due recording pursuant to the Transportation Code of the Old Lease Termination
if the Old Lease was filed of record with the FAA), the FAA ▇▇▇▇ of Sale, the
amended and restated Trust Agreement, the amended and restated Lease (including
the Lease Supplement), and the Indenture (including the Indenture Supplement),
and (iii), subject to customary qualifications, the lack of any intervening
documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Certificate Closing Date is subject to the conditions that, prior to or on
the Certificate Closing Date, the Lessee shall have received the certificates
and other documents which are referred to in, or the opinions to be addressed to
it under, as the case may be, paragraphs (d), (g)(ii)-(v), (j), (k)(ii)-(vi) of
Section 4.01 hereof and the Placement Agent shall have made available the
amounts required to be paid by it pursuant to Section 2.01 hereof, and the
Lessee's obligation to participate in the transactions contemplated hereby on
the Delivery Date, is subject to the conditions that, on or prior to the
Delivery Date, the Lessee shall have received the documents which are referred
to in, or the opinions to be addressed to it under, as the case may be,
paragraphs (c) and (d)(ii)-(vi) of Section 4.02 hereof and the Indenture Trustee
shall have released the Debt Portion from (or such lesser amount as may then be
held in) the Collateral Account.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass-Through Trustee (in its
individual capacity and as Pass-Through Trustee), the Liquidity Provider, and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, on the date hereof and as of the Certificate Closing Date and the Delivery
Date (unless any such representation is specifically made as of one date):
(a) the Lessee is a corporation duly organized and validly
existing and is in good standing under the laws of California, has its
principal place of business and chief executive office (as such terms
are used in Article 9 of the Uniform Commercial Code) in Dulles,
Virginia, and is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the failure to be so
qualified or in good standing would have a materially adverse effect on
its business or would impair its ability to perform its obligations
under the Operative Agreements;
(b) the Lessee has full power, authority and legal right to
conduct its business and operations as currently conducted and to own
or hold under lease its Properties and to enter into and perform its
obligations under this Agreement, the other Operative Agreements to
which it is a party, the Pass-Through Agreement and the Series
Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section
41102(a) of the Transportation Code and a "citizen of the United
States" within the meaning of Section 40102(a)(15) of the
Transportation Code holding an "air carrier operating certificate"
issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect;
(d) the Lessee possesses all necessary certificates,
franchises, licenses, permits, rights and concessions and consents
(collectively "permits") which are material to the operation of the
routes flown by it and the conduct of its business and operations as
currently conducted and each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee
Documents by the Lessee have been duly authorized by all necessary
corporate action on the part of the Lessee and do not require any
stockholder approval, or approval or consent of any trustee or holder
of any indebtedness or obligations of the Lessee, and each such
document has been duly executed and delivered or, in the case of those
Lessee Documents constituting Operative Agreements identified in
Section 4.02(c) hereof, will on the Delivery Date be executed and
delivered by the Lessee and constitutes (or will constitute, as the
case may be) the legal, valid and binding obligations of the Lessee
enforceable against it in accordance with the terms thereof except as
such enforceability may be limited by bankruptcy, insolvency, or other
similar laws or by general equitable principles;
(f) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the
execution, delivery or performance by the Lessee of the Lessee
Documents or for the use and maintenance of the Aircraft except for
such registrations, applications and recordings referred to in the
opinions of Special Aviation Counsel delivered or to be delivered
pursuant to Sections 4.02(d)(vi) and 4.03 hereof and except for the
filings referred to in Sections 4.01(f) and 4.02(f) hereof, all of
which shall be in full force and effect on and as of the Certificate
Closing Date or the Delivery Date, or as contemplated by such Sections;
(g) neither the execution, delivery or performance by the
Lessee of the Lessee Documents nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or
results or will result in a breach or violation of any of the terms,
conditions or provisions of, or will require any consent (other than
the PAA Consent and the Engine Manufacturer's Consent) or approval
under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of the Lessee or any
order, writ, injunction or decree of any court or governmental
authority against the Lessee or by which it or any of its Properties is
bound or any indenture, mortgage or contract or other agreement or
instrument to which the Lessee is a party or by which it or any of its
Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon
any of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or
not purportedly on behalf of the Lessee) against or affecting the
Lessee or any of its Property before or by any court or administrative
agency (A) which involve the Aircraft or (B) which (except as disclosed
in the Offering Memo), if adversely determined, may reasonably be
expected to have a materially adverse effect on the Lessee's
consolidated financial condition, business, or operations, or (C) if
adversely determined, would materially adversely affect the ability of
the Lessee to perform its obligations under the Lessee Documents;
(i) the Lessee has filed or caused to be filed all federal,
state and material local and non-U.S. tax returns which are required to
be filed and has paid or caused to be paid all taxes shown to be due
and payable pursuant to such returns or pursuant to any assessment
received by the Lessee (other than assessments the payment of which is
being contested in good faith by the Lessee by appropriate proceedings
that do not involve any material risk of sale, forfeiture or loss of
the Aircraft or any part thereof), and the Lessee has no knowledge of
any related actual or proposed deficiency or additional assessment
which either in any case or in the aggregate would materially adversely
affect the Lessee's consolidated financial condition;
(j) except for (A) the registration in the Owner Trustee's
name of the Aircraft pursuant to the Transportation Code to be
accomplished by filing with the FAA, of the Old Lease Termination (if
the Old Lease was filed of record with the FAA, the FAA ▇▇▇▇ of Sale,
the Trust Agreement, the Affidavits and the Application, (B) the filing
with and, where appropriate, recordation by the FAA pursuant to the
Transportation Code of the Indenture (including the Indenture
Supplement), and the Lease (including the Lease Supplement), (C) the
filing of the financing statements referred to in Sections 4.01(f) and
4.02(f) hereof, and (D)(x) on the Certificate Closing Date, the taking
of possession by the Indenture Trustee of the Liquid Collateral and
maintaining possession by the Indenture Trustee thereof as contemplated
in Section 2.14(a) of the Indenture, and (y) on the Delivery Date, the
taking of possession by the Indenture Trustee of the original
counterpart of the Lease (including the Lease Supplement), no further
action, including any filing or recording of any document, is necessary
or advisable in order (i) to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee
and any third parties, or (ii) to perfect the first security interest
in and mortgage Lien on the Trust Indenture Estate in favor of the
Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee has received good
and marketable title to the Aircraft, free and clear of all Liens,
except Permitted Liens except the rights of the Owner Trustee and the
Lessee under the Lease and the Lease Supplement, the Lien of the
Indenture, the rights of the Owner Participant under the Trust
Agreement and the rights of the Indenture Trustee under the Indenture
and other Permitted Liens not filed of record;
(l) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end
of this Section 6.01(l)) nor their related trusts has been
terminated in a distress termination pursuant to Section
4041(c) of ERISA or by the Pension Benefit Guaranty
Corporation (together with any successor agency or
instrumentality thereto, the "PBGC") pursuant to Section 4042
of ERISA, nor has any action been taken so to terminate any
Pension Plan or related trust, and neither the Lessee nor any
ERISA Affiliate (as defined at the end of this Section
6.01(l)) has incurred or could reasonably be expected to incur
any material liability with respect to a Pension Plan under
Section 4062, 4063, 4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such
term is defined in Section 4043(b) of ERISA) with respect to
any Pension Plan which have resulted or could reasonably be
expected to result in any material liability of the Lessee or
any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA or Section 412 of the
Code) exists with respect to any Pension Plan, whether or not
waived, nor has any request for a waiver under Section 412(d)
of the Code been, or is reasonably likely to be, filed with
respect to any of the Pension Plans;
(iv) neither the Lessee nor any ERISA Affiliate has
failed to make any contribution or payment to any Pension Plan
which has resulted or could reasonably be expected to result
in the imposition of a Lien under Section 302(f) of ERISA or
Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all
material respects with all applicable provisions of ERISA and
the Code;
(vi) neither the Lessee nor any ERISA Affiliate has
incurred or is reasonably likely to incur any material
withdrawal liability pursuant to Section 4201 or 4204 of ERISA
or any material liability under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither
the Lessee nor any ERISA Affiliate has engaged in a
"prohibited transaction" (within the meaning of Section 4975
of the Code or Section 406 of ERISA) which could reasonably be
expected to subject the Lessee to the tax or penalties on
prohibited transactions imposed by Section 4975 of the Code or
Section 502 of ERISA; and
(viii) assuming the truth of the representations
contained in Section 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this
Agreement and the other Operative Agreements and the
consummation of the transactions contemplated hereby and
thereby will not involve any transaction which is prohibited
by Section 406 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975 of the Code. No part
of the funds to be used by the Lessee in satisfaction of its
obligations under this Agreement or any other of the Operative
Agreements to which the Lessee is a party or to which the
Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement
account or an employee benefit plan subject to Section 4975 of
the Code;
as used in this Section 6.01(l), the term "Pension Plan" means an
employee pension benefit plan as defined in Section 3(2) of ERISA
(other than a multiemployer plan as defined in Section 4001 (a) (3) of
ERISA) which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and which is
maintained, or contributed to, by the Lessee or any ERISA Affiliate,
and the term "ERISA Affiliate" means any entity which together with the
Lessee would be treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code;
(m) the Lessee is a Citizen of the United States;
(n) except for the filings referred to in Sections 4.01(f),
4.02(e) and 4.02(f) hereof, no governmental approval of any kind is
required of the Owner Participant or for the Owner Participant's
execution of or performance under this Agreement or any agreement
contemplated hereby by reason of any fact or circumstance of the
Lessee, the nature of the Aircraft, or the Lessee's proposed operations
or use of the Aircraft;
(o) on the Delivery Date, all premiums which have become due
with respect to the insurance required to be provided by the Lessee on
or prior to the Delivery Date under Section 12 of the Lease have been
paid by the Lessee;
(p) on the Delivery Date, all sales, use, transfer or similar
taxes relating to the sale of the Aircraft by the Seller to the Owner
Trustee which are then or were theretofore due shall have been paid;
(q) the Lessee is not in default under any mortgage, deed of
trust, indenture, lease or other instrument or agreement to which the
Lessee is a party or by which it or any of its Properties or assets may
be bound, or in violation of any applicable law, which default or
violation would have a materially adverse effect on the financial
condition, business or operations of the Lessee or its ability to
perform any of its obligations under the Lessee Documents;
(r) no Default exists and no Event of Loss, or event which
with the passage of time would constitute an Event of Loss, exists;
(s) on the Delivery Date, the Aircraft will be in such
condition so as to enable the airworthiness certificate of such
Aircraft to be in good standing under the Transportation Code; the
Aircraft will have been duly certificated by the FAA as to type and
airworthiness; there will be in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant
to the Transportation Code; and there is no fact known to the Lessee
which materially adversely affects the value, utility, useful life or
condition of the Aircraft;
(t) on the Certificate Closing Date and the Delivery Date, the
Lessee shall not be in default in the performance of any term or
condition of the Purchase Agreement, and the aggregate amount of loans
shall not exceed the Debt Portion;
(u) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(v) on the Delivery Date, the Aircraft will, upon delivery, be
fully equipped to operate in commercial service and will comply with
all governmental requirements governing such service;
(w) there are no broker's or underwriter's fees payable on
behalf of the Lessee in connection with the transactions contemplated
in the Operative Agreements other than those of the Placement Agent and
▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. referred to in Article 10 hereof; and
(x) interest accrued on the Certificates prior to (but
excluding) the Delivery Date shall have been paid on or before the
Delivery Date in accordance with Section 17.02 hereof, together with
all other amounts owing by the Lessee or ACA Inc. under the Indenture
or any other Operative Agreement, to the Holders or the relevant
Indemnitee, as the case may be, on or prior to such date.
Section 6.02. Offering by Lessee. (a) The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust Agreement
other than ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. Neither the Lessee nor, based on
representations of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., anyone acting on its behalf has
directly or indirectly offered any interest in the Lessor's Estate or the Trust
Agreement, or similar interests, for sale to, or solicited any offer to acquire
any of the same from, no more than 80 other accredited investors (as such term
is defined in Regulation D promulgated under the Securities Act of 1933, as
amended).
(b) The Lessee represents and warrants that it has authorized no one to
act on its behalf in connection with the offer or sale of any interest in the
Certificates or the Pass-Through Certificates other than the Placement Agent.
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual and
trust capacities), the Pass-Through Trustee (in its individual and trust
capacities) and the Indenture Trustee (in its individual and trust capacities)
as follows:
(a) The Lessee will cause to be done, executed, acknowledged
and delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee,
the Pass-Through Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of the Operative Agreements.
Without limiting the generality of this Section 6.03(a), the Lessee
will promptly take, or cause to be taken, at the Lessee's cost and
expense, such action with respect to the recording, filing,
re-recording and re-filing of the Indenture (including each supplement
thereto), the Lease (including each supplement thereto), and any
financing statements or other instruments as may be necessary, or as
reasonably requested by the Indenture Trustee and appropriate, to
maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest
in the Aircraft and the Lessor's Estate, as against the Lessee and any
third parties, or if the Lessee cannot take, or cause to be taken, such
action, will furnish to the Indenture Trustee and the Owner Trustee
timely notice of the necessity of such action, together with such
instruments, in execution form, and such other information as may be
required to enable either of them to take such action at the Lessee's
cost and expense in a timely manner.
(b) From and after the Delivery Date, the Lessee shall cause
the Aircraft to be duly registered, and at all times to remain duly
registered, in the name of the Owner Trustee (provided that the Owner
Trustee and the Owner Participant shall be and remain Citizens of the
United States), under the Transportation Code, and shall furnish to the
Owner Trustee such information as may be required to enable the Owner
Trustee to make application for such registration; provided, however,
that the Lessee may, at any time after the end of the Recovery Period
(or before that date if the Lessee prepays in a lump sum any indemnity
required under the Tax Indemnity Agreement as a result of such foreign
registration) cause the Aircraft to be appropriately re-registered
under the laws of a country with which at the time of such registration
the United States maintains normal diplomatic relations and is listed
on Exhibit E-1 to the Lease; provided that
(i) at the time of re-registration, no Specified Default exists or would occur as a result
of such re-registration,
(ii) the Lessee shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating
to such re-registration,
(iii) the Lessee shall, at its cost, cause the interest of the
Owner Trustee as owner of the Aircraft and the Indenture Trustee as
mortgagee thereof to be duly registered or recorded under the laws of
such country and at all times thereafter to remain so duly registered
or recorded unless and until the registration of the Aircraft is
changed as provided herein, and shall cause to be done at all times all
other acts including the filing, recording and delivery of any document
or instrument and the payment of any sum necessary or, by reference to
prudent industry practice in such country, advisable in order to
create, preserve and protect such interest in the Aircraft (including
the first priority duly perfected Lien under the Indenture) as against
the Lessee or any third parties in such jurisdiction, and the laws of
such country would give effect to the Owner Trustee's title to the
Aircraft and the Indenture Trustee's Lien thereon substantially to the
same effect as in the United States,
(iv) the obligations of the Lessee and each other party under
the Operative Documents (and of the Sublessee, if any, under a
Sublease) shall remain or be, as the case may be, legal, valid, binding
and enforceable in such country and in the United States,
(v) The Lessee shall ensure that all insurance provided for
herein shall be in full force and effect prior to, at the time of, and
after such change in registration and the Owner Participant, the Owner
Trustee, and the Indenture Trustee shall receive a certificate of
Lessee's insurance broker to such effect,
(vi) any possessory rights in favor of the Lessee (or any
Sublessee) or any third party, including any government or
instrumentality thereof, taken as whole, are not more restrictive than
existing in the United States (other than immaterial differences in
procedures of enforcement), which would, upon bankruptcy or other
default by the Lessee (or any Sublessee) prevent or delay beyond the
recovery time under the then-existing laws of the United States the
return of the Aircraft to the Owner Trustee in accordance with and when
permitted by the terms of the Lease upon the exercise by the Owner
Trust or the Indenture Trustee of its remedies thereunder, and there is
no adverse effect under the laws of such country of re-registration to
the enforceability (other than immaterial differences in procedures of
enforcement) of the material rights and remedies of the Owner Trustee
and the Indenture Trustee provided for herein and under the other
Operative Agreements (it being understood that, in the absence of
restrictions similar to those imposed under Sections 362 and 363 of the
Bankruptcy Code, rights and remedies similar to those available under
Section 1110 of the Bankruptcy Code are not required),
(vii) the Owner Participant, the Owner Trustee, and the
Indenture Trustee shall have received evidence reasonably satisfactory
to them that such country imposes aircraft maintenance standards
approved by, or at least as stringent as those approved by, the FAA or
the central civil aviation authority of the United Kingdom, France,
Germany or Canada,
(viii) it shall not be necessary by reason of such
re-registration or for purposes of enforcing remedies contained in the
Lease or the Indenture or the related Sublease for the Owner Trustee,
the Indenture Trustee or the Owner Participant to register or qualify
to do business in such country,
(ix) no Liens (except Permitted Liens) shall arise by reason
of such re-registration, and the Indenture shall continue as a first
priority Lien on the collateral thereunder,
(x) none of the Owner Trustee, the Indenture Trustee and the
Owner Participant shall be subjected to any adverse tax consequences
for which the Lessee is not required to and does not then indemnify
such Person in a manner [reasonably] satisfactory to such Person as a
result of such re-registration and, if an additional indemnity is then
provided by the Lessee as the result of such re-registration and the
Owner Trustee, the Indenture Trustee or the Owner Participant
reasonably deems itself insecure with respect to such indemnity, the
Lessee shall have provided security or collateral for said indemnity
which is reasonably satisfactory to such Person,
(xi) in such country, there is no tort liability imposed on
passive lessors other than tort liability which might be imposed under
the prevailing rule among the states of the United States of America,
unless insurance reasonably satisfactory to the Owner Participant
covering such risk is provided by the Lessee or a Sublessee at its
expense,
(xii) any export licenses and certificate of deregistration
required in connection with any repossession or return of the Aircraft
will be readily obtainable in the normal course without material delay
or material burden on the Owner Trustee or the Indenture Trustee, it
being agreed that the Lessee shall be responsible for the cost thereof,
(xiii) the laws of such country require fair compensation by
the government of such country payable in currency freely convertible
into Dollars for the loss of use of the Aircraft (unless the Lessee or
a Sublessee shall have provided insurance reasonably satisfactory to
the Owner Participant covering the risk of requisition of use of the
Aircraft by the government of such country so long as the Aircraft is
registered under the laws of such country), and
(xiv) the Owner Participant, the Owner Trustee, and the
Indenture Trustee shall have received opinions in scope, form and
substance reasonably satisfactory to them, of counsel, expert in the
laws of the United States and such country, to the effect set forth in
clauses (iii), (iv), (vi), (viii), (ix), (x), (xii), (xiii) and, if the
insurance described in such clause is not provided by the Lessee or a
Sublessee, clause (xi) and to such further effect with respect to such
other matters as the Owner Participant, the Owner Trustee, or the
Indenture Trustee may reasonably request.
Lessee agrees to pay on an After-Tax Basis all reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable counsel
fees and disbursements) of the Owner Participant, the Owner Trustee,
and the Indenture Trustee in connection with any re-registration
pursuant to this Section.
At any time and from time to time during the Term, the Owner
Participant may request in writing to the Lessee, or the Lessee may
request in writing to the Owner Participant, that Exhibit E-1 to the
Lease be amended to delete, or in the case of a request from the Lessee
be amended to add, one or more countries on such Exhibit and specified
in such request, such request to be based upon the reasonable belief by
the Owner Participant that changes have occurred after the date hereof
regarding each such country that could adversely affect its interests
in the Operative Documents or the Aircraft, if the Aircraft were
registered in such country, or in the case of a request from the
Lessee, based upon the reasonable belief of the Lessee that each such
country would adequately protect the interests of the Owner
Participant, the Owner Trustee, and the Indenture Trustee in the
Operative Documents and the Aircraft (including, without limitation,
having the characteristics of and meeting the requirements specified
above with respect to the countries listed on such Exhibit), if the
Aircraft were to be registered in such country. Promptly after the
receipt of such request (and in any event within ten Business Days
thereof), the Lessee shall consult in good faith with the Owner
Participant as to whether each such country should be so deleted, or as
to whether such country should be added, as the case may be, and each
party hereto agrees not to unreasonably withhold its consent to such
request. In the event that the Lessee and the Owner Participant shall
agree as to the deletion or addition of any such country, such Exhibit
shall be deemed amended to reflect such agreement (such agreement to be
so evidenced by a writing signed by the Lessee and the Owner
Participant, but without the requirement of any action or signature by
any other Person; otherwise, such Exhibit shall not be so amended.
(c) The Lessee shall promptly file any reports, or furnish to
the Owner Trustee and the Owner Participant such information as may be
required to enable the Owner Trustee and the Owner Participant timely
to file any reports required to be filed by the Owner Trustee as the
Lessor and the Owner Participant under the Lease with any governmental
authority.
(d) The Lessee will cause the Special Aviation Counsel to
file, and where appropriate record, on the Delivery Date, the Old Lease
Termination (if the Old Lease was filed of record with the FAA), the
FAA ▇▇▇▇ of Sale, the Lease (including the Lease Supplement), the Trust
Agreement, and the Indenture (including the Indenture Supplement). The
following documents shall be filed and, where appropriate, recorded on
the Delivery Date with the Aeronautics Authority in the following order
of priority: first, the Old Lease Termination (if the Old Lease was
filed of record with the FAA), second, the FAA ▇▇▇▇ of Sale, third, the
Application, with the Trust Agreement and the Affidavits, fourth, the
Indenture with the Indenture Supplement attached thereto, and fifth,
the Lease with the Lease Supplement, the Indenture, and the Indenture
Supplement attached thereto. So long as the Aircraft remains subject to
the Lien of the Indenture, the Lessee will cause the Special Aviation
Counsel, or other counsel reasonably satisfactory to the Indenture
Trustee, to deliver to the Indenture Trustee an annual legal opinion
regarding the continuing perfection of the Lien under the Indenture.
(e) The Lessee shall at all times maintain its corporate
existence except as permitted by Section 6.03(f) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of
its business, except for any corporate right, privilege or franchise
(i) that it determines, in its reasonable, good faith business
judgment, is no longer necessary or desirable in the conduct of its
business and (ii) the loss of which will not materially adversely
affect or diminish the rights of the Holders or the Owner Participant.
(f) Neither the Lessee nor ACA Inc. shall enter into any
merger with or into or consolidation with, or sell, convey, transfer,
lease or otherwise dispose of in one or a series of transactions all or
substantially all of its assets as an entirety to any Person, unless
the surviving corporation or Person which acquires by purchase,
conveyance, transfer or lease all or substantially all of the assets of
the Lessee as an entirety (i) is a domestic corporation organized and
existing under the laws of the United States or any State of the United
States (ii) is a Citizen of the United States, (iii) is a Section 1110
Person, (iv) if not the Lessee or ACA Inc., executes a duly authorized,
legal, valid, binding, and enforceable agreement, reasonably
satisfactory in form and substance to Owner Trustee and Owner
Participant, containing an effective assumption of all of the Lessee's
or ACA Inc.'s, as applicable, obligations hereunder and under the other
Operative Agreements, and each other document contemplated hereby or
thereby and delivers such instrument to the Indenture Trustee, the
Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel delivered to the Owner Trustee, the Indenture Trustee
and the Owner Participant, which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and
which opinion shall be reasonably satisfactory to the Owner Participant
and the Indenture Trustee, and an officer's certificate, each stating
that such merger, consolidation, conveyance, transfer, lease or other
disposition and the instrument noted in clause (iv) above comply with
this Section 6.03(f), that such instrument is a legal, valid and
binding obligation of, and is enforceable against, such survivor or
Person, and that all conditions precedent herein provided for relating
to such transaction have been complied with, (vi) immediately after
such merger, consolidation or conveyance, transfer or lease, as the
case may be, the surviving company (or Person which acquires by
conveyance, transfer or lease the assets of the Lessee) has a net worth
not less than the lesser of (A) the net worth of the Lessee on the
Delivery Date and (B) 75% of the net worth of the Lessee immediately
prior to such merger, consolidation, conveyance, transfer or lease; and
(vii) such survivor or Person makes such filings and recordings with
the FAA as are required pursuant to part A of subtitle VII or ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Code to evidence such merger or consolidation; provided
that no such merger, consolidation or conveyance, transfer or lease
shall be permitted if, immediately after giving effect to such
consolidation, merger, purchase, conveyance, transfer, lease or other
disposition, no Event of Default shall have occurred and be continuing.
Upon any consolidation or merger, or any conveyance, transfer
or lease of all or substantially all of the assets of the Lessee and
the satisfaction of the conditions specified in this Section 6.03(f),
the successor corporation formed by such consolidation or into which
the Lessee is merged or the Person to which such conveyance, transfer
or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Lessee under this Agreement and
the Lease and each other Operative Agreement and any other document
contemplated hereby and thereby to which the Lessee is a party with the
same effect as if such successor corporation had been named as the
Lessee herein and therein. No such conveyance, transfer or lease of all
or substantially all of the assets of the Lessee as an entirety shall
have the effect of releasing the Lessee or any successor corporation
which shall theretofore have become the Lessee hereunder in the manner
prescribed in this Section 6.03(f) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation
or possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(g) The Lessee agrees to give prompt written notice to the
Owner Participant, the Owner Trustee and the Indenture Trustee of any
change in the address of its chief executive office (as such term is
used in Section 9-103(3) of the Virginia Uniform Commercial Code) or of
any change in its corporate name.
(h) The Lessee agrees to furnish to the Owner Participant and
the Indenture Trustee:
(A) as soon as available, but in any event within 120
days after the end of each fiscal year of ACA Inc., a
consolidated balance sheet as of the end of such fiscal year,
and the related consolidated statements of income, common
stockholders' equity, retained earnings and cash flows of ACA
Inc. for the fiscal year then ended as prepared and certified
by ACA Inc.'s independent certified public accountants,
including their certificate and accompanying comments and
opinion;
(B) within 60 days after the end of the first, second
and third quarterly accounting periods in each fiscal year of
ACA Inc., a consolidated balance sheet of ACA Inc. prepared by
it as of the close of the accounting period then ended,
together with the related consolidated statements of income,
retained earnings and cash flows for such accounting period
certified by the chief accounting officer or a financial vice
president of ACA Inc.;
(C) promptly upon their general transmission, copies
of all reports and statements furnished by ACA Inc. to its
stockholders;
(D) promptly after filing with the SEC, copies of ACA
Inc.'s annual reports on form 10-K, quarterly reports on form
10-Q, and, if requested, any registration statement or
prospectus filed by ACA Inc. with any securities exchange or
the SEC;
(E) promptly upon (and in any event within five
Business Days after) any officer of the Lessee obtaining
knowledge of any condition or event which constitutes an Event
of Default, an officer's certificate specifying the nature and
period of existence thereof and what action the Lessee has
taken or is taking or proposes to take with respect thereto;
and
(F) from time to time, such other financial
information as the Lessor, the Owner Participant or the
Indenture Trustee may reasonably request.
Concurrently with the delivery of the financial statements referred to
in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass-Through Trustee a certificate of
the Lessee, signed by any one of the President, the Chief Financial Officer, the
General Counsel, the Treasurer or the principal accounting officer of the
Lessee, stating that the signer, or an employee reporting to same, is familiar
with the relevant terms of this Agreement and the Lease and the signer has
reviewed, or has caused to be made under such Person's supervision a review, of
the activities of the Lessee and that, to the best of his or her knowledge, no
Default exists, or if a Default does exist, specifying the nature thereof, the
period of existence thereof, and what action the Lessee has taken or proposes to
take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement and the representations and
warranties of ACA Inc. provided in Section 6.04 hereof and is any other
Operative Agreement shall survive the Closings hereunder and the delivery of the
Aircraft and the expiration or other termination of this Agreement and the other
Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Reserved.
Section 7.02. Citizenship. (a) Generally. The Owner Trustee, in its
individual capacity and as trustee, represents and warrants that it is and on
the Delivery Date will be a Citizen of the United States. If the Owner Trustee
in its individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee and the Indenture Trustee hereby agree that no Default
shall be deemed to exist due to non-compliance by the Lessee with the
registration requirements in the Lease or in Section 6.03(b) hereof occasioned
by such the noncompliance of the or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time on or after the Delivery Date it shall have actual
knowledge that it has ceased to be a Citizen of the United States, it will
resign immediately as the Owner Trustee if such citizenship is necessary for
registration of the Aircraft in the Owner Trustee's name under the
Transportation Code as in effect at such time (such necessity to be determined
without regard to any provision of law that permits the U.S. registration of the
Aircraft by restricting where it is based or used) or, if it is not necessary
for such registration, if the Owner Trustee is informed in writing by the
Lessee, the Indenture Trustee or any Owner Participant that such lack of United
States citizenship would have any adverse effect on the Lessee, the Indenture
Trustee, the Holders or any Owner Participant. The Owner Trustee, in its
individual capacity, further covenants that if at any time it appears reasonably
probable that it will cease to be a Citizen of the United States based on
information that is (i) known to a Responsible Officer or (ii) generally known
to the public, it will promptly so notify, to the extent permitted by law, all
parties to this Agreement.
Section 7.03. Concerning Assignment of Interests of Owner Participant.
In connection with the transfer by an Owner Participant to a transferee Owner
Participant, the Owner Trustee, the Lessee and the Indenture Trustee shall be
entitled to receive an opinion or opinions of counsel reasonably satisfactory to
each of them to the effect that the obligations of such transferee under the
Operative Agreements are legal, valid, binding and enforceable in accordance
with their terms, subject to customary exceptions, and that such transfer will
not be required to be registered under applicable securities laws.
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee. (a) In addition to and without limiting its other representations
and warranties provided for in this Article 7, SSB represents and warrants, in
its individual capacity with respect to items (i), (ii), (iii)(A), (iv), (v),
(vi), and (vii) below, and as the Owner Trustee with respect to items (iii)(B)
and (iv) on the date hereof and as of the Certificate Closing Date and the
Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States
of America with its principal place of business and chief executive
office (as such terms are used in Article 9 of the Uniform Commercial
Code) in Hartford, Connecticut, and has full corporate power and
authority, in its individual capacity or (assuming the Trust Agreement
has been duly authorized, executed and delivered by the Owner
Participant) as the Owner Trustee, as the case may be, to carry on its
business as now conducted, and to execute, deliver and perform this
Agreement and the Operative Agreements to which it is or is to be a
party;
(ii) the execution, delivery and performance by SSB, either in
its individual capacity or as the Owner Trustee, as the case may be, of
this Agreement and the Operative Agreements to which it is or is to be
party have been duly authorized by all necessary corporate action on
its part, and do not contravene its articles of association or by-laws;
each of this Agreement and the other Operative Agreements to which it
is or is to be a party has been duly authorized, and has been duly
executed and delivered or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be duly
executed and delivered by SSB, either in its individual capacity or as
the Owner Trustee, as the case may be, and neither the execution and
delivery thereof nor SSB performance of or compliance with any of the
terms and provisions thereof will violate any federal or Connecticut
law or regulation governing SSB's banking or trust powers,
(iii) (A) assuming due authorization, execution and delivery
by each other party thereto, each of the Operative Agreements to which
it is or is to be party when duly executed and delivered will, to the
extent each such document is entered into by SSB in its individual
capacity, constitute the legal, valid and binding obligation of SSB in
its individual capacity enforceable against it in such capacity in
accordance with its respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar
laws or equitable principles of general application to or affecting the
enforcement of creditors' rights (regardless of whether enforceability
is considered in a proceeding in equity or at law), and the performance
by SSB in its individual capacity of any of its obligations thereunder
does not contravene any lease, regulation or contractual restriction
binding on SSB in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or
is to be party when duly executed and delivered will, to the extent
each such document is entered into by the Owner Trustee in its trust
capacity, constitute the legal, valid and binding obligation of the
Owner Trustee enforceable against it in such capacity in accordance
with its respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or other similar laws or
general equitable principles, and the performance by the Owner Trustee
of any of its obligations thereunder does not contravene any lease,
regulation or contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened
actions or proceedings against SSB before any court or administrative
agency which would materially adversely affect the ability of SSB,
either in its individual capacity or as the Owner Trustee, as the case
may be, to perform its obligations under the Operative Agreements to
which it is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the
Owner Participant at least 30 days' prior written notice in the event
of any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any
of the Operative Agreements to which it is or is to be a party,
requires on the part of SSB in its individual capacity or any of its
Affiliates the consent or approval of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
federal or Connecticut governmental authority or agency governing its
banking or trust powers; and
(vii) on the Certificate Closing Date, the proceeds arising
from the issuance and sale of the Certificates shall be free of
Lessor's Liens attributable to SSB in its individual capacity and on
the Delivery Date the Owner Trustee shall be holding whatever title to
the Aircraft as was conveyed to it by the Seller, the Aircraft shall be
free of Lessor's Liens attributable to SSB in its individual capacity,
and SSB in its individual capacity is a Citizen of the United States.
(b) Lessor's Liens. SSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity and that there will not
be any such Lessor's Liens on the Certificate Closing Date or the
Delivery Date. The Owner Trustee, in its trust capacity, and at the
cost and expense of the Lessee, covenants that it will in its trust
capacity promptly, and in any event within 30 days after the same shall
first become known to it, take such action as may be necessary to
discharge duly any Lessor's Liens attributable to it in its trust
capacity. SSB, in its individual capacity, covenants and agrees that it
will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30
days after the same shall first become known to it, any Lessor's Liens
attributable to it in its individual capacity which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. SSB, in its individual
capacity, agrees to indemnify and hold harmless the Lessee, the
Indenture Trustee, the Owner Participant and the Pass-Through Trustee
and the Owner Trustee from and against any loss, cost, expense or
damage which may be suffered by the Lessee, the Indenture Trustee, the
Owner Participant, the Pass-Through Trustee or the Owner Trustee as a
result of the failure of SSB to discharge and satisfy any Lessor's
Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of SSB, the Owner Trustee or any
Person authorized by either of them to act on its behalf has directly
or indirectly offered or sold or will directly or indirectly offer or
sell any interest in the Lessor's Estate, or in any similar security
relating to the Lessor's Estate, or in any security the offering of
which for purposes of the Securities Act of 1933, as amended, would be
deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of
the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither SSB,
in its individual capacity, nor the Owner Trustee will take any action
to subject the Lessor's Estate or the trust established by the Trust
Agreement, as debtor, to the reorganization or liquidation provisions
of the Bankruptcy Code or any other applicable bankruptcy or insolvency
statute.
(f) Actions With Respect to Lease. The Owner Trustee will not
assign any of its rights under the Lease without the consent of the
Owner Participant, which consent will not be unreasonably withheld or
delayed.
Section 7.05. Representations, Warranties and Covenants of the Indenture Trustee. (a) The Indenture
Trustee in its individual capacity represents on the date hereof and as of the Certificate Closing Date and the
Delivery Date as follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States
of America and has the power and authority to enter into and perform
its obligations under the Indenture, this Agreement and the other
Operative Agreements to which it is a party and to authenticate the
Certificates to be delivered on the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication
of the Certificates to be delivered on the Certificate Closing Date,
have been duly authorized by all necessary corporate action on its
part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any
default under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is or is to be a party, has been duly
executed and delivered or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be
executed and delivered by it and, assuming that each such agreement is
the legal, valid and binding obligation of each other party thereto, is
(or will be, as the case may be), the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms except as such enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar
laws or equitable principles of general application to or affecting the
enforcement of creditors ' rights (regardless of whether enforceability
is considered in a proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture
and this Agreement and the other Operative Agreements to which it is or
is to be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of,
the giving of notice to, the registration with, or the taking of any
other action in respect of, any Federal or state governmental authority
or agency governing its banking and trust powers; and
(v) on the Certificate Closing Date, the Indenture Trustee
holds the Liquid Collateral on behalf of the Owner Trustee and on the
Delivery Date, the Indenture Trustee will hold the original
counterparts of the Lease and the Lease Supplement.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its individual
capacity, further represents, warrants and covenants that there are no Indenture
Trustee's Liens attributable to it in its individual capacity and that there
will not be any Indenture Trustee's Liens on the Certificate Closing Date or, as
at and following the Delivery Date, the Aircraft. The Indenture Trustee, in its
individual capacity, covenants and agrees that it will at its own expense take
such action as may be necessary to duly discharge and satisfy in full, promptly,
and in any event within 30 days, after the same shall first become known to it,
any Indenture Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee, in
its individual capacity, agrees to indemnify and hold harmless the Lessee, the
Owner Participant, the Owner Trustee and the Pass-Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the
Pass-Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default or Event of
Default promptly upon a Responsible Officer of the Indenture Trustee having
actual knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee covenants
and agrees, for the benefit of the Lessee and the Owner Participant, to execute
and deliver the instruments of release from the Lien of the Indenture which it
is required to execute and deliver in accordance with the provisions of Article
XIV of the Indenture, and the Owner Participant agrees, for the benefit of the
Lessee, to cause the Owner Trustee to request the Indenture Trustee to execute
and deliver such instruments of release upon written notice from the Lessee to
make such request.
Section 7.08. Covenant of Quiet Enjoyment. Each of the Owner
Participant, the Indenture Trustee, the Pass-Through Trustee and the Owner
Trustee covenants and agrees as to itself only that, so long as no Event of
Default under the Lease has occurred and is continuing, neither the Owner
Participant (or the Owner Trustee, the Pass-Through Trustee or the Indenture
Trustee, as the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Pass-Through Trustee or the Indenture
Trustee, as the case may be) shall interfere with the Lessee's right quietly to
enjoy the Aircraft during the Term without hindrance or disturbance by the Owner
Participant (or the Owner Trustee, the Pass-Through Trustee or the Indenture
Trustee, as the case may be).
Section 7.09. Pass-Through Trustee's Representations and Warranties.
The Pass-Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the date hereof (except as
otherwise provided), as of the Pass-Through Closing Date, the Certificate
Closing Date and the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States
of America and has the power and authority to enter into and perform
its obligations under the Pass-Through Agreement, the Series
Supplements, the Intercreditor Agreement and this Agreement and to
execute and authenticate the Pass-Through Certificates to be delivered
on the Pass-Through Closing Date;
(ii) the execution, delivery and performance of this
Agreement, the Pass-Through Agreement and the Series Supplements and
the performance of its obligations hereunder and thereunder (including
the execution and authentication of the Pass-Through Certificates to be
delivered on the Pass-Through Closing Date) have been fully authorized
by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any federal or Maryland law or
regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles
of association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or
its properties may be bound or affected; and
(iii) each of this Agreement and the Pass-Through Agreement
has been, and as of the Pass-Through Closing Date the Series
Supplements will be, duly executed and delivered by it (in its
individual and trust capacities) and, assuming that each such agreement
is the legal, valid and binding obligation of each other party thereto,
is or will be, as the case may be, the legal, valid and binding
obligation of the Pass-Through Trustee (in its individual and trust
capacities), enforceable in accordance with its respective terms except
as limited by bankruptcy, insolvency, moratorium, reorganization or
other similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights generally (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass-Through Trustee
(in its individual or trust capacity), the Indenture Trustee (in its individual
or trust capacity) and the Subordination Agent (in its individual or trust
capacity) provided for in this Article 7, and their respective obligations under
any and all of them, shall survive the Closings, the delivery of the Aircraft
and the expiration or other termination of this Agreement, and the other
Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject to
compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to purchase the Aircraft pursuant to the terms of the
Operative Agreements, if no Event of Default shall exist, then, upon compliance
with the applicable provisions of the Operative Agreements, the Owner Trustee
will transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens attributable to the Owner Trustee) but subject to the
Lien of the Indenture, all of the Owner Trustee's right, title and interest in
and to the Aircraft, and if the Lessee, in connection with such purchase, elects
to assume the obligations of the Owner Trustee to the Indenture Trustee and the
Holders under the Indenture, the Certificates, and hereunder, then the Lessee
shall so notify the Indenture Trustee (such notice to be given at least 30 and
not more than 60 days prior to the effective date of such assumption), and each
of the parties shall execute and deliver appropriate documentation permitting
the Lessee to assume such obligations on the basis of full recourse to the
Lessee, maintaining for the benefit of the Holders the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions of
this Section 7.11 releasing the Owner Participant and the Owner Trustee from all
obligations in respect of the Certificates, the Indenture, this Agreement, and
the other Operative Agreements, except any obligations relating to the period
prior to such assumption and take all such other actions, at the Lessee's
expense, as are reasonably necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A)
pursuant to which the Lessee irrevocably and unconditionally assumes
and undertakes, with full recourse to the Lessee, to pay, satisfy, and
discharge when and as due (at the stated maturity thereof, by
acceleration or otherwise) the principal of, Make-Whole Premium, if
any, interest, and all other sums owing on all Outstanding Certificates
(or on the Lessee's substituted obligations) in accordance with their
terms, and punctually to perform and observe all of the covenants and
obligations hereunder and under the Indenture and the Certificates (as
the same may be amended in connection with such assumption) to be
performed or observed by the Owner Trustee, and (B) which contains
amendments to the Indenture, in form and substance as reasonably
satisfactory to the Indenture Trustee, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially
identical in scope and effect to those set forth in the Lease and
covenants substantially identical to the covenants of the Lessee
hereunder and under the Lease;
(ii) the instrument referred to in paragraph (i) of this
Section 7.11(b), any Uniform Commercial Code financing statements
relating thereto, and any other documents which shall be necessary (or
reasonably requested by the Indenture Trustee) to establish the
Lessee's title to and interest in the Aircraft or to reflect the
substitution of the Lessee for the Owner Trustee under the Operative
Agreements or to continue the perfection of the security interests in
the Aircraft and the other, rights, Property, and interests included in
the Trust Indenture Estate for the benefit of the Holders (or the
Lessee's substituted obligations) shall be filed in such form, manner,
and places as are necessary or, in the reasonable opinion of the
Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance
report dated the effective date of such assumption of an independent
insurance broker and certificates of insurance, each in form and
substance satisfactory to the Indenture Trustee, as to the due
compliance as of the effective date of such assumption with the terms
of Article 1 3 of the Lease (as it relates to the Indenture Trustee)
relating to the insurance with respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that
as of the effectiveness of the assignment on the date of such
assumption the Aircraft is free and clear of all Liens other than the
Lien of the Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate
from the Lessee that no Event of Default exists as of the effective
date of such assumption;
(vi) the Indenture Trustee shall have received a guaranty of
the Certificates substantially in the form of the ACA Guaranty; and
(vii) the Indenture Trustee shall have received (A) from
counsel for the Lessee (who may be the Lessee's General Counsel) a
legal opinion, in form and substance as reasonably satisfactory to the
Indenture Trustee: (w) with respect to the compliance of the assumption
contemplated hereby with the terms hereof, (x) with respect to the due
authorization, execution, delivery, validity, and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y)
with respect to the continued perfection of the first and prior Lien
and security interest in the Aircraft for the benefit of the Holders of
the Certificates (or the Lessee's substituted obligations) referred to
in paragraph (ii) of this Section 7.11(b), and (z) with respect to the
continued availability of the benefits of Section 1110 of the
Bankruptcy Code to the Indenture Trustee for the benefit of the Holders
with respect to the Aircraft after giving effect to such assumption,
(B) from counsel to the Indenture Trustee and Special Aviation Counsel,
a legal opinion comparable to the respective opinions delivered on the
Certificate Closing Date or the Delivery Date, as the case may be, with
such changes therein as may be appropriate in light of such assumption,
and (C) in the case of each opinion described in clause (A) or (B)
above, covering such additional matters as the Indenture Trustee shall
reasonably request.
(c) The Lessee shall pay all reasonable expenses (including reasonable
fees and expenses of counsel) of the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Owner Participant in
connection with such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the Indenture
is in effect, the Owner Trustee, not in its individual capacity, but solely as
trustee under the Trust Agreement, shall not incur any indebtedness for borrowed
money except as expressly contemplated herein or in any other Operative
Agreement (excluding the Tax Indemnity Agreement) and shall not engage in any
business or other activity other than the transactions contemplated herein or in
any other Operative Agreement (excluding the Tax Indemnity Agreement) and all
necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc.. Each of the
Initial Owner Participant, SSB, and the Owner Trustee agrees with the Lessee,
the Indenture Trustee, the Liquidity Providers and the Pass-Through Trustee that
so long as the Lien of the Indenture shall be in effect it will (i) comply with
all of the terms of the Trust Agreement applicable to it in its respective
capacity, the noncompliance with which would materially adversely affect any
such party and (ii) not take any action, or cause any action to be taken, to
amend, modify or supplement any other provision of the Trust Agreement in a
manner that would materially adversely affect any such party without the prior
written consent of such party. The Owner Trustee confirms for the benefit of the
Lessee, the Indenture Trustee, the Liquidity Providers and the Pass-Through
Trustee that it will comply with the provisions of Article 2 of the Trust
Agreement. Notwithstanding anything else to the contrary in the Trust Agreement,
so long as the Lease remains in effect, the Initial Owner Participant agrees not
to terminate or revoke the trust created by the Trust Agreement without the
consent of the Lessee. If and so long as the Indenture shall not have been
discharged the consent of the Indenture Trustee shall also be required prior to
any termination or revocation of such trust and in addition, the Owner
Participant will, at the Lessee's expense, promptly and duly execute and deliver
to the Indenture Trustee such documents and assurances including, without
limitation, conveyances, financing statements and continuation statements with
respect to financing statements and take such further action as the Indenture
Trustee may from time to time reasonably request in order to protect the rights
and remedies created or intended to be created in favor of the Indenture Trustee
under the Indenture and to create for the benefit of the Certificate Holders a
valid first priority Lien with respect to, and a first and prior perfected
security interest in, the Trust Indenture Estate.
Section 7.14. Subordination Agent's Representations, Warranties and Covenants. (a) Representations and
Warranties. The Subordination Agent represents and warrants as of the date hereof (except as otherwise
provided), the Pass-Through Closing Date, the Certificate Closing Date, and the Delivery Date, that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States
of America and has the corporate power and authority to enter into and
perform its obligations under this Agreement, the Liquidity Facilities
and the Intercreditor Agreement;
(ii) the execution, delivery and performance of this
Agreement, each of the Liquidity Facilities and the Intercreditor
Agreement and the performance of its obligations hereunder and
thereunder have been fully authorized by all necessary, corporate
action on its part, and, neither the execution and delivery thereof nor
its performance of any of the terms and provisions thereof will violate
any federal or Maryland law or regulation relating to its banking or
trust powers or contravene or result in any breach of, or constitute
any default under its articles of association, or bylaws or the
provisions of any indenture, mortgage, contract or other agreement to
which it is a party or by which it or its properties may be bound or
affected;
(iii) each of this Agreement, the Liquidity Facilities and the
Intercreditor Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may
be, the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent
imposed by the State of Maryland or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services rendered
in connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities), and there are no Taxes
payable by the Subordination Agent imposed by the State of Maryland or
any political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Certificates other than franchise or other taxes based on or measured
by any fees or compensation received by the Subordination Agent for
services rendered in connection with the transactions contemplated by
the Intercreditor Agreement or any of the Liquidity Facilities);
(v) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the Intercreditor Agreement or any Liquidity Facility;
(vi) the Subordination Agent has not directly or indirectly
offered any Certificate for sale to any Person or solicited any offer
to acquire any Certificates from any Person, nor has the Subordination
Agent authorized anyone to act on its behalf to offer directly or
indirectly any Certificate for sale to any Person, or to solicit any
offer to acquire any Certificate from any Person; and the Subordination
Agent is not in default under any Liquidity Facility; and
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee.
(b) Covenants. (i) The Subordination Agent agrees not to amend any
Liquidity Facility without the consent of the Lessee (so long as no Event of
Default shall have occurred and be continuing) and of the Owner Participant
(such consents not to be unreasonably withheld or delayed).
(ii) In connection with the deposit in the applicable Cash Account of
amounts drawn pursuant to any Downgrade Drawing or Non-Extension Drawing (as
defined in the Liquidity Facility) under a Liquidity Facility, the Subordination
Agent agrees, so long as no Event of Default shall have occurred and be
continuing, to pay to the Lessee promptly following each Regular Distribution
Date any Investment Earnings on the amount so deposited which remain after
application of such Investment Earnings pursuant to Section 2.06 of such
Liquidity Facility to the interest payable on such Downgrade Drawing under
Section 3.07 of such Liquidity Facility. Capitalized terms used in this Section
shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross receipts,
sales, rental, use, value added, property (tangible and intangible), ad valorem,
excise and stamp taxes), fees, levies, imposts, recording duties, duties,
charges, assessments or withholdings of any nature whatsoever, together with any
assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed or
asserted (whether imposed upon any Indemnitee, the Lessee, all or any part of
the Aircraft, Airframe, any Engine or any Part or the Lessor's Estate, the Trust
Indenture Estate, Rent, the Certificates or otherwise upon or with respect to
any Operative Agreement, any payments thereunder or otherwise in connection
therewith), by any Federal, state or local government or taxing authority in the
United States, or by any government or taxing authority of a foreign country or
of any political subdivision or taxing authority thereof or by a territory or
possession of the United States or an international taxing authority relating to
or measured by:
(i) the construction, mortgaging, financing, refinancing,
purchase, acceptance, rejection, delivery, nondelivery, transport,
location, ownership, registration, reregistration, deregistration,
insuring, assembly, possession, repossession, operation, use, non-use,
condition, maintenance, repair, improvement, conversion, sale, return,
abandonment, preparation, installation, storage, redelivery,
replacement, manufacture, leasing, subleasing, sub-subleasing,
modification, alteration, rebuilding, importation, transfer of title,
transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on,
the Aircraft, the Airframe, any Engine or any Part or any interest
therein;
(ii) amounts payable under the Operative Agreements;
(iii) the Property, or the income or other proceeds received
with respect to the Property attributable to the transactions
contemplated by the Operative Agreements, held by the Owner Trustee
under the Trust Agreement or after an Event of Default under the Lease,
or by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement, any
interest therein or by reason of the transactions described in or
contemplated by the Operative Agreements;
(v) the principal or interest or other amounts payable with respect to the Certificates;
(vi) the Pass-Through Certificates or the Certificates or the
issuance, sale, acquisition, reoptimization, or refinancing thereof or
the beneficial interests in the Trust Estate or the Trust Indenture
Estate or the creation thereof under the Trust Agreement or the
Indenture, or the security interest created or perfected thereby or by
any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of
this Agreement;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and
Supplemental Rent), receipts or earnings arising from the Operative
Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01 (a) shall not extend to any of the
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following:
(i) With respect to an Indemnitee, Taxes, whether imposed by
withholding or otherwise, based upon, measured by or with respect to
the net or gross income, items of tax preference or minimum tax or
excess profits, receipts, capital, franchise, net worth (whether,
denominated income, excise, capital stock, or doing business taxes) or
other similarly-based taxes (other than sales, use, value-added,
transfer, rental, ad valorem, stamp, property, or similar taxes)
("Income Taxes") imposed by the United States or by any state, local or
foreign jurisdiction in which such Indemnitee is subject to tax without
regard to the transactions contemplated by the Operative Agreement,
provided, however, that this clause (i) shall not exclude from the
indemnity described in Section 8.01(a) above any such Income Taxes to
the extent such taxes are imposed by any jurisdiction in which the
Indemnitee would not be subject to such taxes of such type but for, or
would be subject to such taxes of such type solely as a result of, (x)
the operation, registration, location, presence, or use of the
Aircraft, Airframe, any Engine or any Part thereof, in such
jurisdiction or (y) the place of incorporation or principal office or
the activities of the Lessee or any Affiliate thereof or any sublessee
in such jurisdiction (it being understood that (A) any such indemnity
would be payable only to the extent of the net harm incurred by the
Indemnitee from such Income Taxes, taking into account any incremental
current Tax benefit in another tax jurisdiction resulting from payment
of such Income Taxes and (B) this sentence would require
indemnification in a jurisdiction in which the Indemnitee is already
subject to an Income Tax (an "Existing Income Tax") only if an event
set forth in Clause (x) or (y) of this sentence causes the Indemnitee
to be subject to an Income Tax in that jurisdiction (a "New Income
Tax") other than an Existing Income Tax, and such New Income Tax would
have been imposed even if the activities contemplated by the Operative
Agreements were the Indemnitee's sole nexus to the jurisdiction);
provided, further, that the provisions of this paragraph (b)(i)
relating to Income Taxes shall not exclude from the indemnity described
in Section 8.01(a) hereof any Income Taxes for which the Lessee would
be required to indemnify an Indemnitee (x) so that any payment under
the Operative Agreements, otherwise required to be made on an After-Tax
Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02, 8.05, 9.02 or 9.05 of this Agreement;
(ii) Taxes on items of tax preference or any minimum tax or alternative minimum tax;
(iii) Taxes imposed with respect to any period after the later
of (A) the discharge in full of the Lessee's obligation, if any, to pay
Stipulated Loss Value or Termination Value under and in accordance with
the Lease, and (B) the earliest of (x) the expiration of the Term of
the Lease and return of the Aircraft in accordance with Section 5 of
the Lease, (y) the termination of the Lease in accordance with the
applicable provisions of the Lease and return of the Aircraft in
accordance with the Lease, or (z) the termination of the Lease in
accordance with the applicable provisions of the Lease and the transfer
of all right, title and interest in the Aircraft to the Lessee pursuant
to its exercise of any of its purchase options set forth in Section 16
of the Lease, provided that this exclusion (iii) shall not apply in
respect of any payment made after the dates set forth in clauses (A)
and (B) above if such payment is made with respect to any period prior
to such return or transfer, or Taxes incurred in connection with the
exercise of any remedies pursuant to Section 15 of the Lease following
the occurrence of an Event of Default;
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement or, as to the
Indenture Trustee, Taxes imposed against the Indenture Trustee upon or
with respect to any fees received by it for services rendered in its
capacity as Indenture Trustee under the Indenture;
(v) With respect to any Indemnitee, Taxes resulting from the
willful misconduct or gross negligence of any Indemnitee (other than
gross negligence or willful misconduct not actually committed by but
instead imputed to any Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative
Agreements) or the breach by any Indemnitee of any representation,
warranty or covenant contained in the Operative Agreements or any
document delivered in connection therewith (unless attributable to a
breach of representation, warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner
Participant or any successor, assign or Affiliate thereof which became
payable by reason of any voluntary or involuntary transfer or
disposition by such Indemnitee subsequent to the Delivery Date,
including revocation of the Trust, of any interest in some or all of
the Aircraft, Airframe, Engines or Parts thereof or its interest in the
Lessor's Estate (not including any transfers of any Certificates
pursuant to Section 15.01 (a) hereof) or a disposition in connection
with a bankruptcy or similar proceedings involving either the Lessor or
the Owner Participant or a transfer or disposition of shares or other
interests in the Owner Trustee or the Owner Participant or a transfer
or disposition of shares or other interests in the Owner Trustee or the
Owner Participant other than (A) transfers resulting from a loss,
substitution or modification of the Aircraft, Engines or any Part, (B)
any transfer of the Aircraft, Engines or any Part (in each case other
than at Fair Market Value) to the Lessee, (C) transfers pursuant to the
Lessor's exercise of remedies in accordance with Section 15 of the
Lease or (D) a transfer pursuant to the Lessee's exercise of its rights
under Section 3(g) of the Lease; the parties agree to cooperate to
minimize any such Taxes covered by this provision;
(vii) Taxes subject to indemnification by the Lessee pursuant
to the Tax Indemnity Agreement;
(viii) Taxes imposed on a successor, assign or other
transferee of any interest of any Indemnitee (including, without
limitation, a transferee which is a new lending office of an original
Indemnitee) to the extent that such Taxes would not have been imposed
on the original Indemnitee or exceed the amount of Taxes that would
have been imposed and would have been indemnifiable pursuant to Section
8.01(a) hereof had there not been a succession, assignment or other
transfer by such original Indemnitee of any such interest of such
Indemnitee in the Aircraft or any Part, any interest in or under any
Operative Agreement, or any proceeds thereunder, provided, however,
that the exclusion provided by this clause (viii) shall not apply in
the case of a succession, transfer or disposition (A) pursuant to the
exercise of remedies under Section 15 of the Lease, (B) which is an
actual or deemed transfer pursuant to Section 7.11 hereof or as a
consequence of a Refinancing under Section 15.01 hereof, or any actual
or deemed transfer of a Certificate that as part of a Refinancing under
Section 15.01 hereof is not retired, but only to the extent the Taxes
attributable to such transfer exceed the amount of Taxes that would
have been imposed on such transferor if the debt had instead been
retired, (C) to the extent necessary to make payments with respect to
such Taxes on an After-Tax Basis, or (D) to the extent such Taxes are
directly attributable to the failure of the Lessee to take
administrative actions as have been reasonably requested of it in
writing in a timely manner and which will result in no after-tax cost
or expense to the Lessee;
(ix) Taxes imposed by any jurisdiction that would not have
been imposed on the Owner Trustee or the Owner Participant but for the
activities or the status of the Owner Trustee or the Owner Participant
in such jurisdiction unrelated to the transactions contemplated by the
Operative Agreements;
(x) Any Taxes which have been included in the Purchase Price;
(xi) Any Taxes which would not have been imposed but for a
Lessor's Lien or an Indenture Trustee's Lien;
(xii) Any Taxes imposed on the Owner Participant arising under
or in connection with any prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code ("Prohibited
Transaction"); and
(xiii) Taxes that would not have been imposed but for the
existence or status of any trust used to hold title to the Aircraft.
(c) Withholding. The Pass-Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass-Through Certificate
who is a Non-U.S. Person except to the extent that such a holder of a
Pass-Through Certificate has furnished evidence to the Pass-Through Trustee
sufficient under applicable law to entitle such holder of a Pass-Through
Certificate to any exemption from or reduction in the rate of withholding on
interest claimed by such holder of a Pass-Through Certificate. The Indenture
Trustee shall withhold any Taxes required to be withheld on any payment to a
Holder pursuant to Section 5.09 of the Indenture. If the Indenture Trustee or
the Pass-Through Trustee fails to withhold a Tax required to be withheld with
respect to any Holder of a Certificate or any holder of a Pass-Through
Certificate or any claim is otherwise asserted by a taxing authority against the
Owner Trustee or Owner Participant for any withholding tax, the Lessee will
indemnify the Owner Trustee and the Owner Participant (without regard to the
exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis against
any such Taxes required to be withheld and any interest and penalties with
respect thereto, along with any other costs (including reasonable attorney's
fees) incurred in connection with any such claim. The Indenture Trustee or the
Pass-Through Trustee, as the case may be, in its individual capacity (and
without recourse to the Trust Indenture Estate), shall indemnify the Lessee
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis for any payment the Lessee shall have made pursuant to the
preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax Basis,
to the same position such party would have been in had such Tax not been
incurred, provided that the calculation of any additional amounts owing to any
Indemnitee as a result of the Lessee's obligation to indemnify on an After-Tax
Basis shall be made without regard to the exclusions set forth in Section
8.01(b). If any Indemnitee realizes a Tax benefit (whether by credit, deduction
or otherwise), or would have realized such a benefit if properly claimed, by
reason of the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee, to the extent such Tax benefit was
not previously taken into account in computing such payment, but not before the
Lessee shall have made all payments then due to such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such tax benefit plus any other tax
benefit realized by such Indemnitee that would not have been realized but for
any payment made by such Indemnitee pursuant to this sentence and not already
paid to the Lessee, and (y) the amount of the payment made under Section 8.01
hereof and this Section 8.02 by the Lessee to such Indemnitee plus the amount of
any other payments by the Lessee to such Indemnitee theretofore required to be
made under this Section 8.02 and Sections 8.01 and 8.05 hereof (and the excess,
if any, of the Tax benefit over the applicable amount described in clause (x) or
clause (y) above shall be carried forward and applied to reduce pro tanto any
subsequent obligations of the Lessee to make payments to such Indemnitee
pursuant to Section 8.01 hereof); provided, however, that notwithstanding the
foregoing portions of this sentence, such Indemnitee shall not be obligated to
make any payment to the Lessee pursuant to this sentence as long as an Event of
Default shall have occurred and be continuing under the Lease. The Lessee shall
reimburse on an After-Tax Basis such Indemnitee (subject to Section 8.01(b)
hereof) for any payment of a tax benefit pursuant to the preceding sentence (or
a tax benefit otherwise taken into account in calculating the Lessee's indemnity
obligation hereunder) to the extent that such tax benefit is subsequently
disallowed or reduced.
In determining the order in which any Indemnitee utilizes withholding
or other foreign taxes as a credit against such Indemnitee's United States
income taxes, such Indemnitee shall be deemed to utilize (i) first, all foreign
taxes other than those described in clause (ii) below; provided, that such other
foreign taxes which are carried back to the taxable year for which a
determination is being made shall be deemed utilized after foreign taxes
described in clause (ii) below, and (ii) then, on a pro rata basis, all foreign
taxes with respect to which such Indemnitee is entitled to obtain
indemnification pursuant to an indemnification provision contained in any lease,
loan agreement, or other financing document (including this Participation
Agreement) that is similar to the indemnification provision in this Article 8.
Notwithstanding the preceding paragraph, if foreign taxes of an
Indemnitee have been indemnified hereunder and all such indemnified foreign
taxes have not been used to produce a credit against such Indemnitee's United
States income taxes resulting in the realization of a tax benefit paid to the
Lessee in accordance with the first paragraph of this Section 8.02, a tax
benefit will be deemed to be attributable to such indemnified foreign taxes to
the extent that an item of income derived from the transactions contemplated in
the Operative Agreements is allocable to sources outside the United States and
such allocation results in an increase in the amount of foreign tax credit such
Indemnitee is entitled to use in any taxable year over the amount of foreign tax
credit such Indemnitee would have been entitled to use if such foreign source
allocation had not occurred.
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee accompanied
by a written statement describing in reasonable detail the basis for such
indemnity and the computation of the amount so payable, provided that in the
case of amounts which are being contested by the Lessee in good faith or by the
Indemnitee in either case pursuant to Section 8.04 hereof, such amount shall be
payable within 30 days after the time such contest is finally resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment or
indemnity hereunder, such Indemnitee shall promptly (but in any event within 30
days of receipt thereof) give the Lessee notice in writing of such claim and
shall furnish the Lessee with copies of any written requests for information
sent to such Indemnitee (and not the Lessee) from any taxing authority to the
extent relating to such Taxes with respect to which the Lessee may be required
to indemnify hereunder and with respect to which it would be necessary or
beneficial to have information provided by the Lessee; provided, however, that
the failure of an Indemnitee to give such notice or furnish such copy shall not
terminate any of the rights of such Indemnitee under this Article 8, except (a)
to the extent that the Lessee's contest rights have been materially and
adversely impaired by the failure to provide such notice or copy or (b) to the
extent that such failure results in the imposition of, or an increase in the
amount of, any penalties, interest or additions to Tax related to the Tax which
is the subject of such claim or proceeding. The Lessee may, at its option,
contest in its own name or, if required by law, require the Indemnitee to
contest in good faith, with due diligence and at the Lessee's expense, if timely
requested in writing by the Lessee, the validity, applicability or amount of
such Taxes by:
(i) resisting payment thereof if lawful and
practicable or not paying the same except under protest if
protest is necessary and proper in each case so long as
non-payment will not result in a material risk of the sale,
forfeiture or loss of, or the creation of a Lien other than a
Permitted Lien on the Aircraft, Airframe or any Engine or any
risk of criminal liability; or
(ii) if the payment be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and
judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled to
contest any such Tax in its own name unless the Tax is reflected in a report or
a return of the Lessee or raised in an audit or other proceeding of the Lessee
and the Lessee is allowed to directly contest such Tax under applicable law of
the taxing jurisdiction provided, that if the Lessee is so permitted under
applicable law to contest a Tax asserted against the Lessee and the same or
similar Tax is also asserted against the Indemnitee, each of the Lessee and such
Indemnitee shall conduct its contest in its own name and the Lessee and such
Indemnitee will cooperate in a reasonable manner with respect to the respective
contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such Indemnitee
shall control the contest and shall determine the manner in which to contest
such Taxes and shall periodically or upon the Lessee's request advise the Lessee
of the progress of such contest; provided, however, that the Lessee shall have
the right to be consulted in good faith with respect to any contest of claims
subject to indemnification hereunder, including governmental and judicial
conferences and the right to be consulted in good faith regarding the relevant
portions of all related submissions to any governmental or other authority,
provided, however, that the Lessee shall be permitted to participate in any such
contest only (x) with respect to issues that can be separated on audit from any
Taxes for which the Lessee is not required to indemnify the Indemnitee
hereunder, and (y) if the Indemnitee shall have determined that in its judgment,
exercised in its sole discretion, neither such participation nor the separation
of issues will adversely affect the Indemnitee. Notwithstanding the foregoing
provisions of this paragraph, if the Lessee acknowledges in writing its
liability to the Indemnitee hereunder with respect to the Taxes subject to the
contest if the contest is resolved adversely, the Lessee shall control such
contest. If the Lessee satisfies the conditions imposed on it in this Section
8.04 and an Indemnitee nevertheless fails to contest and refuses to permit the
Lessee to contest under and as and to the extent required by this Section 8.04,
then the Lessee shall not be obligated to indemnify such Indemnitee for such
claim or for any other claim for which a successful contest is adversely
affected because of such failure to contest or to permit a contest. The
Indemnitee will not settle a contest that results in a final determination
without consent of the Lessee, unless the Indemnitee waives its right to
indemnification with respect to such contest and any related contest. Any such
settlement, concession, or compromise without the prior written consent of the
Lessee shall constitute a waiver of such Indemnitee's rights to indemnification
hereunder with respect to such claim and any other claim for which a successful
contest is adversely affected because of such settlement, concession, or
compromise. Notwithstanding the preceding sentences of this Section 8.04, such
Indemnitee shall not be required to take or continue any action unless the
Lessee shall have (i) agreed in writing to pay and shall pay the Indemnitee on a
current basis and on an After-Tax Basis all reasonable fees and expenses
(including reasonable attorneys' fees and accountants' fees) which such
Indemnitee may incur as a result of contesting such Taxes, and (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements. In no event shall such
Indemnitee be required or the Lessee be permitted to contest pursuant to this
Section 8.04 the imposition of any Tax for which the Lessee is obligated to
indemnify any Indemnitee hereunder unless (i) such Indemnitee shall have
received, at the Lessee's expense, an opinion of tax counsel selected by the
Lessee, such counsel to be reasonably satisfactory to the Indemnitee ("Tax
Counsel"), to the effect that there exists a reasonable basis for contesting
such claim, (ii) such contest will not result in any material risk of loss, sale
or forfeiture of, or the creation of a Lien (other than Permitted Liens) on, the
Aircraft or any part thereof or interest thereon or in a risk of criminal
liability, or adversely affect the Trust Indenture Estate, (iii) if a Specified
Default exists, the Lessee shall have provided security for its obligations
hereunder reasonably satisfactory to the Indemnitee, (iv) if such contest shall
be conducted in a manner requiring payment of the claim in advance, the Lessee
shall have advanced sufficient funds, on an interest free basis, to make the
payment required, and agreed to indemnify the Indemnitee against any additional
net adverse tax consequences on an After-Tax Basis to such Indemnitee of such
advance, and (v) the issue shall not be the same as an issue previously
contested hereunder and decided adversely, unless the Indemnitee shall have
received at the Lessee's sole expense, a written opinion, in form and substance
reasonably satisfactory to such Indemnitee, of Tax Counsel to the effect that
the applicable circumstances or law has changed and that in light thereof, there
is substantial authority for contesting such claim; provided, that in the event
that such Indemnitee is not required under this paragraph to contest any Tax
liability for which the Lessee is obligated to indemnify any Indemnitee, the
Lessee may contest such Tax liability in the name of the Lessee, if permitted by
law. The Lessee may appeal or require the Indemnitee to appeal any judicial
decision provided the foregoing requirements of this Section 8.04 are met and
the Indemnitee shall have received, at the Lessee's expense, an opinion of Tax
Counsel, to the effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section 8.04,
if such Indemnitee shall waive payment by Lessee of any amount that might
otherwise be payable by Lessee under this Article 8 in connection with such
claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund (or
would have received such a refund but for offset by matters not indemnifiable by
the Lessee under Section 8.01(a)) of all or any part of any Taxes which the
Lessee shall have paid for such Indemnitee or for which the Lessee shall have
reimbursed or indemnified such Indemnitee, and provided that no Specified
Default exists (but if a Specified Default does exist, payment shall not be made
to the Lessee until no Specified Default exists), such Indemnitee shall pay to
the Lessee an amount equal to the amount of such refund or offset less (x) any
expenses not previously reimbursed, (y) all payments then due to such Indemnitee
under this Article 8, and (z) Taxes imposed with respect to the accrual or
receipt thereof, including interest received attributable thereto, plus any tax
benefit realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed (i)
the amount of all prior payments by the Lessee to such Indemnitee pursuant to
this Article 8 less (ii) the amount of all prior payments by such Indemnitee to
the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as a
Tax subject to indemnification under the provisions of this Article 8 (in the
case of any such tax benefit, subject to Section 8.01 (b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or may
be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall, to the extent it has knowledge thereof, make such report or return,
except for any such report or return that the Indemnitee has notified the Lessee
that it intends to file, in such manner as will show the ownership of the
Aircraft in the Owner Trustee and shall send a copy of the applicable portions
of such report or return to the Indemnitee and the Owner Trustee or will notify
the Indemnitee of such requirement and make such report or return in such manner
as shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee
will provide such information within the possession or control of the Lessee as
the Indemnitee may reasonably require from the Lessee to enable the Indemnitee
to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements (without duplication of any comparable
requirements of the Tax Indemnity Agreement) and any audit information request
arising from any such filing. The Indemnitee will provide such information
within its possession or control as the Lessee may reasonably require from such
Indemnitee to enable the Lessee to fulfill its tax filing requirements with
respect to the transactions contemplated by the Operative Agreements and any
audit information request arising from such filing; provided that in no event
shall any Indemnitee be required to provide copies of any of its tax returns or
other confidential information. The Lessee shall hold the Indemnitee harmless on
an After-Tax Basis from and against any liabilities, including penalties,
additions to tax, fines and interest, imposed upon or incurred by such
Indemnitee to the extent directly attributable to any insufficiency or
inaccuracy in any return, statement, or report prepared by the Lessee or
information supplied by the Lessee, or directly attributable to the Lessee's
failure to supply information within its possession or control to such
Indemnitee as required by this Section 8.06. If an Indemnitee makes any
representation regarding the value of the Aircraft or any part thereof to any
taxing authority without the Lessee's prior written consent as to the value
represented (which consent shall not be unreasonably withheld), that Indemnitee
shall be responsible for any Tax to the extent that it would not have been
payable if the value used were a value reasonably proposed by the Lessee.
Section 8.07. Survival of Obligations. The representations, warranties,
indemnities and agreements of the Lessee provided for in this Article 8 and the
Lessee's obligations under any and all of them, in each case, with respect to
events or periods prior to the expiration or termination of the Lease shall
survive the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft, Airframe,
any Engine or Parts, to the extent permitted by the applicable federal, state,
local or foreign law, the Lessee shall pay such tax directly to the relevant
Taxing authority and file any returns or reports required with respect thereto
to the extent legally entitled to do so in its own name; provided, however, that
the Lessee shall not make any statements or take any action which would indicate
that the Lessee or any Person other than the Owner Trustee or Owner Participant
is the owner of the Aircraft, the Airframe, any Engine or any Part or which
would otherwise be inconsistent with the terms of the Lease or the Tax Indemnity
Agreement and the position thereunder of the Owner Trustee and the Owner
Participant. Copies of such returns or reports, together with evidence of
payment of any tax due, shall be sent by the Lessee to the Owner Participant
within 30 days after the date of each payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the extent
the Lessee is required to pay or withhold any Tax imposed on or with respect to
an Indemnitee in respect of the transactions contemplated by the Operative
Agreements, which Tax is not otherwise the responsibility of the Lessee under
the Operative Agreements, or any other written agreements between the Lessee and
such Indemnitee, then such Indemnitee shall pay to the Lessee within 30 days of
the Lessee's demand therefor an amount which equals the amount actually paid by
the Lessee with respect to such Taxes.
Section 8.10. Special Indemnity. Notwithstanding anything in this
Article 8 to the contrary, the Lessee shall hold the Owner Participant harmless
on an After-Tax Basis from any Taxes or losses arising from or in connection
with the transactions contemplated by Section 17.02 hereof (provided, that this
Section 8.10 shall not require any indemnification for any Loss of Tax Benefits,
as defined in the Tax Indemnity Agreement).
. At the Lessee's request, the accuracy of any calculation of amount(s)
payable pursuant to this Article 8 shall be verified by independent public
accountants selected by the applicable Indemnitee and reasonably satisfactory to
the Lessee, and such verification shall bind the applicable Indemnitee and the
Lessee. In order, and to the extent necessary, to enable such independent
accountants to verify such amounts, such Indemnitee shall provide to such
independent accountants (for their confidential use and not to be disclosed to
the Lessee or any other person) all information reasonably necessary for such
verification. Verification shall be at the expense of the Lessee, unless such
verification results in an adjustment in the Lessee's favor of $10,000 or more
of the amount of the payment as computed by such Indemnitee, in which case the
verification shall be at the expense of the Indemnitee.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee against and in respect of, and will pay on an After-Tax Basis, from
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, disbursements and expenses, demands or judgments
(including legal fees and expenses and all costs and expenses relating to
amendments, supplements, adjustments, consents, refinancings and waivers under
the Operative Agreements except as otherwise provided in Section 10.01(c)(i)
hereof) of every kind and nature, including without limitation Make-Whole
Premium (other than any Make-Whole Premium payable as a result of an Indenture
Event of Default that is not a Lease Event of Default), and whether arising
before, on, or after the Certificate Closing Date, (whether or not any of the
transactions contemplated by this Agreement are consummated) (individually, an
"Expense," collectively, "Expenses"), which may be imposed on, incurred or
suffered by or asserted against any Indemnitee, in any way relating to, based on
or arising out of or in connection with, in each case directly or indirectly,
any one or more of the following:
(i) any Operative Agreement, any document entered into in
connection therewith, any sublease or transfer, or any other
transaction contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance,
storage, overhaul, delivery, non-delivery, control, repair or testing
of the Aircraft, Airframe, or any Engine or any engine used in
connection with the Airframe, or any Part thereof by the Lessee, any
sublessee or any other Person whatsoever, whether or not such
operation, possession, use, non-use, maintenance, storage, overhaul,
delivery, non-delivery, control, repair or testing is in compliance
with the terms of the Lease, including, without limitation, claims for
death, personal injury or property damage or other loss or harm to any
Person whatsoever, including, without limitation, any passengers,
shippers or other Persons wherever located, and claims or penalty
relating to any laws, rules or regulations, including, without
limitation, environmental control, noise and pollution laws, rules or
regulation;
(iii) the manufacture, design, sale, return, purchase,
acceptance, rejection, delivery, non-delivery, condition, repair,
modification, servicing, rebuilding, airworthiness, registration,
reregistration, deregistration, ownership, financing, import, export,
performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or
replacement of any Airframe, Engine, or Part or other transfer of use
or possession, or other disposition of the Aircraft, the Airframe, any
Engine or any Part including, without limitation, latent and other
defects, whether or not discoverable, strict tort liability, and any
claims for patent, trademark or copyright infringement;
(iv) any breach of or failure to perform or observe, or any
other non-compliance with, any condition, covenant or agreement to be
performed, or other obligations of the Lessee under any of the
Operative Agreements or any Pass-Through Agreement, or the falsity or
inaccuracy of any representation or warranty of the Lessee in any of
the Operative Agreements or any Pass-Through Agreement (other than
representations and warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements
and the administration of the Trust Indenture Estate; and
(vii) the offer, issuance, sale, resale or delivery of any
Certificate or any Pass-Through Certificate, or any refunding or
refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or any similar interest or in any way relating to or arising
out of the Trust Agreement and the Lessor's Estate, the Indenture or
the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state or
foreign statute, law or regulation, or at common law or otherwise
relating to securities), or the action or inaction of the Owner Trustee
or Indenture Trustee as trustees, in the manner contemplated by this
Agreement, the Indenture, the Indenture Supplement or the Trust
Agreement and in the case of the Owner Participant, its obligations
arising under Section 6.01 of the Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a result
of their respective ownership or leasing of any interest in or holding of any
Lien on the Aircraft, Airframe, any Engine or Part during the Term, whether or
not in the Lessee's possession or control, insofar as such Expense relates to
any activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise of
remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements), and
such Expense does not fall within any of the exceptions listed in Section 9.01
(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01 (a) shall not extend to any Expense of
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any Indemnitee to the extent it:
(i) results from the willful misconduct or gross negligence of
any Indemnitee (other than gross negligence or willful misconduct
imputed to such person by reason of its interest in the Aircraft or any
transaction documents);
(ii) is attributable to acts or events (other than the
performance by Lessee of its obligations pursuant to the terms of the
transaction documents) which occur after the Aircraft is no longer part
of the Lessor's Estate or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term (unless the Aircraft
is being returned at such time, in which case after return of physical
possession; provided that if the Lease has been terminated pursuant to
Section 15 thereof, the indemnity provided in Section 9.01(a) hereof
shall survive for so long as Lessor or the Indenture Trustee shall be
exercising remedies under such Section 15), or to acts or events which
occur after return of possession of the Aircraft by the Lessee in
accordance with the provisions of the Lease (subject to the foregoing
proviso if the Lessor has terminated the Lease pursuant to Section 15
of the Lease);
(iii) is a Tax or loss of a Tax benefit, whether or not the
Lessee is required to indemnify therefor pursuant to Article 8 hereof
or pursuant to the Tax Indemnity Agreement;
(iv) is a cost or expense required to be paid by an Indemnitee
or its permitted transferees (and not by the Lessee) pursuant to this
Agreement or any other Operative Agreement and for which the Lessee is
not otherwise obligated to reimburse such Indemnitee, directly or
indirectly pursuant to the terms of this Agreement or such other
Operative Agreement;
(v) results from the incorrectness or breach by any Indemnitee
of its representations or warranties, under any of the Operative
Agreements;
(vi) results from the failure by any Indemnitee to perform its
obligations under any of the Operative Agreements;
(vii) is, in the case of the Owner Participant, Lessor's Liens
to the extent attributable to the Owner Participant; in the case of the
Owner Trustee, Lessor's Liens to the extent attributable to the Owner
Trustee; in the case of SSB, Lessor's Liens to the extent attributable
to SSB; and in the case of the Indenture Trustee, Indenture Trustee's
Liens;
(viii) is, in the case of the Owner Participant or the Owner
Trustee, attributable to the offer or sale by such Indemnitee after the
Certificate Closing Date of any interest in the Aircraft, the Lessor's
Estate or the Trust Agreement or any similar interest (including an
offer or sale resulting from bankruptcy or other proceedings for the
relief of debtors in which such Indemnitee is the debtor), unless in
each case such offer or sale shall occur (x) pursuant to the exercise
of remedies under Section 15 of the Lease or (y) in connection with the
Lessee's exercise of its early termination option under Section 3(g) of
the Lease or its purchase options under Section 16 of the Lease or in
connection with Section 11 of the Lease;
(ix) is an Expense arising under or in connection with any
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code ("Prohibited Transaction");
(x) results from any amendment to any of the Operative
Agreements which is not requested by the Lessee and is not required
pursuant to the terms of any of the Operative Agreements;
(xi) results from the exercise by any Indemnitee of any right
to inspect the Aircraft except with respect to any such inspection
conducted while an Event of Default is continuing; and
(xii) constitutes the loss of future profits or losses
attributable to the Owner Participant's and/or the Owner Trustee's
overhead.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee realizes a Tax benefit (whether by credit,
deduction or otherwise), or would have realized such a benefit if properly
claimed, by reason of the payment of such Expense paid or indemnified against by
the Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made all
payments theretofore due such Indemnitee under this Agreement, the Tax Indemnity
Agreement and any other Operative Agreement, an amount equal to the lesser of
(x) the sum of such Tax benefit plus any other permanent Tax benefit realized by
such Indemnitee as the result of any payment made by such Indemnitee pursuant to
this sentence and (y) the amount of the payment pursuant to Section 9.01 by the
Lessee to such Indemnitee plus the amount of any other payments by the Lessee to
such Indemnitee theretofore made pursuant to this Section 9.02 less the amount
of any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the Tax benefit over the
applicable amount described in clause (x) or clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the Lessee
to make payments to such Indemnitee pursuant to this Section 9.02), it being
intended that no Indemnitee should realize a net Tax benefit pursuant to this
Section 9.02 unless the Lessee shall first have been made whole for any payments
by it to such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence so
long as a Specified Default exists. Any Taxes that are imposed on any Indemnitee
as a result of the disallowance or reduction of such Tax benefit referred to in
the next preceding sentence in a taxable year subsequent to the year of
allowance and utilization by such Indemnitee (including the expiration of any
tax credit carryovers or carrybacks of such Indemnitee that would not otherwise
have expired) shall be indemnifiable pursuant to the provisions of Section 8.01
hereof without regard to Section 8.01 (b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee in respect of the matter against which
such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee shall
give prompt written notice one to the other of any liability of which such party
has received notice for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that such failure adversely
affects any applicable defense or counterclaim, or otherwise increases the
amount the Lessee would have been liable for in the absence of such failure to
provide such notice. Unless otherwise provided in the Operative Agreements, any
amount payable to an Indemnitee pursuant to this Article 9 shall be paid within
30 days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis for
such indemnity and the computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of all
or any part of any amount which the Lessee shall have paid to such Indemnitee or
for which the Lessee shall have reimbursed such Indemnitee under this Article 9,
and provided that no Specified Default exists (but if a Specified Default does
exist, payment shall not be made to the Lessee until no Specified Default
exists), such Indemnitee shall pay to the Lessee the amount of any such
recovery, including interest received with respect to the recovery, net of any
Taxes paid or payable as a result of the receipt of the recovery and interest,
plus any net additional tax benefits realized by the Indemnitee as the result of
any payment made pursuant to this sentence less reasonable costs incurred by
such Indemnitee and not indemnified by the Lessee; provided, however, that such
amount shall not be payable (a) before such time as the Lessee shall have made
all payments or indemnities then due and payable to such Indemnitee under this
Article 9, or (b) to the extent that the amount of such payment would exceed the
amount of all prior payments by the Lessee to such Indemnitee pursuant to this
Article 9, less the amount of all prior payments by such Indemnitee to the
Lessee pursuant to this Article 9. Any subsequent loss of such recovery or tax
benefit shall be subject to indemnification under Article 8 or this Article 9,
as the case may be, subject to Section 8.01 (b) hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers shall have
the right (in each such case at the Lessee's sole expense) to investigate,
defend (and control the defense of) any such claim covered by insurance for
which indemnification is sought pursuant to this Article 9 (in the case of any
such defense by the Lessee, but not the Lessee's insurers, with counsel
reasonably satisfactory to the relevant Indemnitee) and each Indemnitee shall
cooperate with the Lessee or its insurers with respect thereto, provided, that,
without limiting the right of the Lessee's insurers to assume and control the
defense of, or to compromise, any such claim, the Lessee shall not be entitled
to assume and control the defense of or compromise any such claim (A) during the
continuance of any Event of Default arising under Section 14(a) of the Lease,
(B) if such Indemnitee reasonably objects to such control on the ground that an
actual or potential material conflict of interest exists making it advisable (on
the basis of prevailing standards of professional responsibility) for such
Indemnitee to be represented by separate counsel or on the grounds that such
proceeding involves the potential imposition of criminal liability on such
Indemnitee or (C) such proceeding will involve any material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than Permitted Liens)
on the Aircraft or the Trust Estate (unless the Lessee posts a bond or other
security reasonably acceptable in form and substance to such Indemnitee) or
involve any material risk of civil liability to such Indemnitee for which it is
not indemnified hereunder and, in any such case, the relevant Indemnitee will,
in good faith, undertake the defense of such claim at the expense of the Lessee.
Subject to the immediately foregoing sentence, where the Lessee or the insurers
under a policy of insurance maintained by the Lessee undertake the defense of an
Indemnitee with respect to such a claim, no additional legal fees or expenses of
such Indemnitee in connection with the defense of such claim shall be
indemnified hereunder unless the fees or expenses were incurred at the written
request of the Lessee or such insurers or as the result of the prohibition of
the dual representation of Lessee and the relevant Indemnitee under the
applicable rules of legal ethics. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, to the extent that such party's
participation does not, in the opinion of the independent counsel appointed by
the Lessee or its insurers to conduct such proceedings, interfere with such
control; and such participation shall not constitute a waiver of the
indemnification provided in this Section 9.06. No Indemnitee shall enter into
any settlement or other compromise with respect to any claim described in this
Section 9.06 without the prior written consent of the Lessee (except during the
continuance of an Event of Default arising under Section 14(a) of the Lease),
which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified under this Article 9 with respect
to such claim. The Lessee shall not enter into any settlement or compromise
which the Lessee has not agreed to discharge or with respect to which the Lessee
has not agreed to indemnify such Indemnitee to such Indemnitee's satisfaction or
which admits any criminal violation, gross negligence or willful misconduct on
the part of any Indemnitee without the prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations, warranties,
indemnities and agreements of the Lessee provided for in this Article 9 and the
Lessee's obligations under any and all of them shall survive the expiration or
other termination of this Agreement, the Tax Indemnity Agreement, the Trust
Agreement, the Indenture, the Purchase Agreement Assignment, the Lease and the
other Operative Agreements but, as to such indemnities after the expiration or
other termination of the Lease, only with respect to losses, liabilities,
obligations, damages, penalties, claims, actions, suits, costs, Expenses and
disbursements caused by events occurring or existing prior to such termination
or expiration or incurred in the process of (i) the return or disposition of the
Aircraft under Section 5 or Section 15 of the Lease, or (ii) the termination of
the Lease or the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a primary
obligor whether or not the Person indemnified shall also be indemnified with
respect to the same matter under the terms of this Agreement, the Lease, the
Indenture, the Trust Agreement, or any other document or instrument, and the
Person seeking indemnification from the Lessee pursuant to any provision of this
Agreement may proceed directly against the Lessee without first seeking to
enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
Section 9.10. Special Indemnity. Notwithstanding anything in this
Article 9 to the contrary, the Lessee shall hold the Owner Participant harmless
on an After-Tax Basis from any losses arising from or in connection with the
transactions contemplated by Section 17.02 hereof.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. Except as otherwise provided in any amendment to this Agreement, the
Lessee (or the Owner Participant following a transfer of the Initial Owner
Participant's Beneficial Interest) shall pay (or reimburse the Lessee if the
Lessee shall have previously made such payment) all fees and expenses of the
following persons relating to the offering of the Pass-Through Certificates
contemplated by the Placement Agreement and related to the transactions
contemplated hereby on the Certificate Closing Date and the Delivery Date: (i)
the fees and expenses of counsel for any Owner Participant (including any
special Canadian counsel); (ii) the fees and expenses of the transaction
documentation counsel for the Lessee and counsel for the Owner Trustee, the
Indenture Trustee, the Manufacturer, SDIQ, the Seller, the Subordination Agent,
the Pass-Through Trustee, each Liquidity Provider and the Placement Agent (other
than those fees, expenses and disbursements payable by the Placement Agent
pursuant to the Placement Agreement); (iii) the fees and expenses of Special
Aviation Counsel; (iv) any initial fees and expenses of the Pass-Through Trustee
and each Liquidity Provider and the fees and expenses of the Owner Trustee, the
Subordination Agent and the Indenture Trustee; (v) any compensation, commissions
and discounts payable to the Placement Agent pursuant to the Placement
Agreement; (vi) the fees, if any, incurred in printing the Pass-Through
Certificates; (vii) the fees and expenses incurred in connection with printing
any offering memorandum for the offering of the Pass-Through Certificates;
(viii) the fees and expenses of BDO ▇▇▇▇▇▇▇ LLP; (ix) the fees and expenses of
▇▇▇▇▇'▇ and S&P; (x) the fees and expenses (including computer time-sharing
charges) of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.; (xi) the reasonable out-of-pocket expenses of
the Owner Participant, including, without limitation, any amounts paid in
connection with any appraisal report prepared for the Owner Participant; (xii)
reimbursement to the Owner Participant, any Owner Participant Guarantor, the
Owner Trustee, the Indenture Trustee, the Subordination Agent, each Liquidity
Provider and the Pass-Through Trustee for any and all fees, expenses and
disbursements of the character referred to above or otherwise incurred in
connection with the negotiation, preparation, execution and delivery, filing and
recording of the Operative Agreements and the documents contemplated thereby,
including, without limitation, travel expenses and disbursements which shall
have been paid by such party; (xiii) printing and duplicating expenses and all
fees, Taxes and other charges payable in connection with the recording or filing
on or before the Delivery Date of the instruments described in this Agreement;
(xiv) initial fees, initial expenses, initial disbursements and the initial
costs of distributing the Certificates (but not the continuing fees, expenses,
disbursements and costs of distribution) of SSB, as lessor under the Lease and
as Owner Trustee under the Trust Agreement and with respect to the
administration of the Lease and the Lessor's Estate, of the Indenture Trustee as
trustee under the Indenture with respect to the administration of the Trust
Indenture Estate and of the Subordination Agent acting under the Intercreditor
Agreement; and (xv) any other amounts approved by the Lessee and the Owner
Participant. The fees and expenses described in clauses (ii) through (x) of this
paragraph shall be allocable to the Owner Participant under this Agreement (1)
to the extent incurred specifically with respect to the Owner Participant, and
(2) to the extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass-Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the indicative percentages for Basic Rent, Stipulated Loss Value and
Termination Value and the indicative EBO Price to be set forth in the Lease have
been prepared assuming the aggregate amount payable by the Owner Participant
pursuant to the preceding paragraph is 2.9% of the Purchase Price (the
"Estimated Expense Amount").
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, the continuing fees, expenses and disbursements (including reasonable
counsel fees and initial fees relating to the establishment of a replacement
trustee) of the Pass-Through Trustee and the Subordination Agent and the
continuing fees, expenses and disbursements (including reasonable counsel fees
and initial fees relating to the establishment of a replacement liquidity
provider) of the Liquidity Providers under each Liquidity Facility shall be paid
as Supplemental Rent by the Lessee, including without limitation any amounts
payable to the Indenture Trustee or on account of requests by the Indenture
Trustee for indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of the
foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the
Owner Participant, any Owner Participant Guarantor, the Indenture
Trustee, the Subordination Agent, the Liquidity Providers and the
Pass-Through Trustee all costs and expenses (including reasonable legal
fees and expenses) incurred by any of them in connection with (a) any
Default and any enforcement or collection proceedings resulting
therefrom, or (b) the enforcement of the obligations of the Lessee
hereunder or under the other Operative Agreements, including, without
limitation, the entering into or giving or withholding of any
amendments or supplements or waivers or consents (whether or not
consummated), including without limitation, any amendment, supplement,
waiver or consent resulting from any work-out, restructuring or similar
proceeding relating to the performance or nonperformance by the Lessee
of its obligations under the Operative Agreements or (c) any amendment,
supplement, waiver or consent (whether or not entered into) under this
Agreement, the Lease, the Indenture, the Certificates, the Tax
Indemnity Agreement, the Purchase Agreement Assignment or any other
Operative Agreement or document or instrument delivered pursuant to any
of them, which amendment, supplement, waiver or consent is required by
any provision of any Operative Agreement (including any adjustment
pursuant to Section 3(d) of the Lease) or is requested by the Lessee or
necessitated by the action or inaction of the Lessee; provided,
however, that the Lessee shall not be responsible for fees or expenses
incurred in connection with the offer, sale or other transfer (whether
pursuant to Section 7.03(d) hereof or otherwise) by the Owner
Participant, the Owner Trustee, the Indemnitee Trustee, or any Holder
after the Certificate Closing Date of any interest in the Aircraft, the
Lessor's Estate, the Beneficial Interest or the Trust Agreement or any
similar interest (and the offeror, seller, or transferor shall be
responsible for all such fees and expenses), unless such offer, sale or
transfer shall occur (A) pursuant to the exercise of remedies under
Section 15 of the Lease, or (B) in connection with the termination of
the Lease or action or direction of the Lessee pursuant to Section
3(g), 11, or 16 of the Lease; and
(ii) to pay one-half of the fees, costs and expenses of all
appraisers involved in an independent appraisal of the Aircraft to the
extent required under Section 16 of the Lease; provided that the Lessee
shall pay all such fees, costs, and expenses of any appraisal conducted
pursuant to Section 15 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a) Resignation
and Removal. The Owner Trustee or any successor Owner Trustee may resign or may
be removed by the applicable Owner Participant, and a successor Owner Trustee
may be appointed and a Person may become Owner Trustee under the Trust Agreement
only in accordance with the provisions of Section 3.11 of the Trust Agreement
and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall be
subject to the following conditions:
(i) such successor Owner Trustee shall be a Citizen of the United States;
(ii) such successor Owner Trustee shall be a bank or a trust
company having combined capital, surplus and undivided profits of at
least $100,000,000 or a bank or trust company fully guaranteed by a
direct or indirect parent thereof having a combined capital, surplus
and undivided profits of at least $100,000,000;
(iii) such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which
the Aircraft may then be registered or create a relationship which
would be in violation of the Transportation Code or any applicable rule
or regulation of the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered;
(iv) such successor Owner Trustee shall enter into an
agreement or agreements, in form and substance reasonably satisfactory
to the Lessee, the Owner Participant, the Pass-Through Trustee and the
Indenture Trustee whereby such successor Owner Trustee confirms that it
shall be deemed a party to this Agreement, the Trust Agreement, the
Lease, the Lease Supplement, the Purchase Agreement Assignment, [the
Engine Warranty Assignment], the Indenture, the Indenture Supplement
and any other Operative Agreement to which the Owner Trustee is a party
and agrees to be bound by all the terms of such documents applicable to
the Owner Trustee and makes the representations and warranties
contained in Section 7.04 hereof (except that it may be duly
incorporated, validly existing and in good standing under the laws of
the United States of America or any State thereof); and
(v) all filings of Uniform Commercial Code financing and
continuation statements, filings in accordance with the Transportation
Code and amendments thereto shall be made and all further actions taken
in connection with such appointment as may be necessary in connection
with maintaining the validity, perfection and priority of the Lien of
the Indenture and the valid and continued registration of the Aircraft
in accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered under
the Transportation Code, the Owner Participant agrees to appoint promptly a
successor Owner Trustee meeting the requirements of Section 11.01 (b) hereof in
the event the Owner Participant has knowledge that the Owner Trustee at any time
shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE
OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. No Owner
Participant shall have any obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture, the
Trust Agreement, the Tax Indemnity Agreement, the Lease or any other Operative
Agreement to which the Owner Participant is a party and no Owner Participant
shall be liable for the performance by any other party hereto of such other
party's obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant be
liable to any Holder, in each case for any action or inaction on the part of the
Owner Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
any other Operative Agreement, the ownership of the Aircraft, the administration
of the Lessor's Estate or the Trust Indenture Estate or otherwise, whether or
not such action or inaction is caused by the willful misconduct or gross
negligence of the Owner Trustee or the Indenture Trustee, except to the extent
of any action or inaction taken pursuant to the Owner Participant's directions
or instructions.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder under
this Agreement, under the Indenture and under such Certificates shall have been
paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee hereby
consents in all respects to the execution and delivery of the Indenture, the
Trust Agreement, the Intercreditor Agreement and the Liquidity Facilities as
initially executed and to all of the terms of such documents, and the Lessee
acknowledges receipt of an executed counterpart of such documents; it being
agreed that such consent shall not be construed to require the Lessee's consent
to any future supplement to, or amendment, waiver or modification of the terms
of the Indenture, the Intercreditor Agreement or the Liquidity Facilities, the
Trust Agreement or the Certificates, in each case as originally executed, except
that prior to the occurrence and continuance of an Event of Default, no section
of the Indenture, the Trust Agreement, the Intercreditor Agreement or the
Liquidity Facilities, in each case as originally executed, shall be amended or
modified in any manner materially adverse to the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the Owner
Trustee may not enter into any amendment, modification or supplement of, or give
any waiver or consent with respect to, or approve any matter or document as
being satisfactory under the Lease without the prior consent of the Indenture
Trustee and the Owner Participant and that, except as otherwise provided in the
Indenture, upon an Indenture Event of Default, the Indenture Trustee may act as
the Lessor under the Lease to the exclusion of the Owner Trustee. The Lessee
further agrees to deliver to the Indenture Trustee and the Owner Participant a
copy of each notice, statement, request, report or other communication given or
required to be given to the Owner Trustee under the Lease.
Section 13.03. Pass-Through Trustee's and Subordination Agent's
Acknowledgment. The Pass-Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture, including without limitation, Section 8.01 thereof regarding the
rights of the Owner Participant to purchase the Certificates under the
circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, or (b) if given by certified mail, return receipt
requested, by courier service, or by any other commercially customary means,
when received or personally delivered, addressed:
(a) if to the Lessee, to its office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, telephone (▇▇▇) ▇▇▇-▇▇▇▇,
facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as the Lessee shall
from time to time designate in writing to the Lessor, the Indenture
Trustee and any Owner Participant;
(b) if to the Lessor or the Owner Trustee, to its office at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇ Square), Hartford, CT 06103, Attention:
Corporate Trust Department, telephone (▇▇▇) ▇▇▇-▇▇▇▇ facsimile (860)
244-1889; or to such other address as the Lessor shall from time to
time designate in writing to the Lessee and the Indenture Trustee, with
a copy to the Owner Participant;
(c) if to the Indenture Trustee, the Subordination Agent or
the Pass-Through Trustee, to its office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department, telephone
(▇▇▇) ▇▇▇-▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as
the Indenture Trustee or the Pass-Through Trustee, as the case may be,
shall from time to time designate in writing to the Lessor, the Lessee
and the Owner Participant; and
(d) if to the Liquidity Provider, to its office at ING Bank
N.V., Department of Bankgarantie Zaken-Jurisdische Zaken, Amsterdamse
Poort, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, telephone
▇▇▇-▇▇-▇▇-▇▇▇-▇▇▇▇, facsimile 011-31-20-652-3235, with a copy to ING
Lease (Ireland) B.V. ▇▇ ▇▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇,
telephone ▇▇▇-▇▇▇-▇-▇▇▇-▇▇▇▇, facsimile 011-353-1-662-2240; or to such
other address as a Liquidity Provider shall from time to time designate
in writing to the Lessor, the Lessee and the Indenture Trustee.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and conditions of
this Section 15.01, the Lessee may request an Owner Participant to participate
in one refinancing in whole but not in part, of the Certificates prior to the
end of the Basic Term (a "Refinancing"). Such Refinancing may be placed in
either the private or public markets and shall be denominated in United States
dollars and shall be on terms reasonably satisfactory to the Owner Participant.
The Owner Participant will agree to negotiate promptly in good faith to conclude
an agreement with the Lessee as to the terms of any such Refinancing transaction
(including the terms of any debt to be issued in connection with such
refinancing and the documentation to be executed in connection therewith).
Without the prior written consent of the Owner Participant, the prospectus and
other offering materials relating to any Refinancing in the form of a public
offering shall not identify the Owner Participant and shall not include any
financial statements of the Owner Participant or any Affiliate thereof. In
connection with any such Refinancing in the form of a public offering, the
Lessee shall indemnify the Owner Participant in a manner satisfactory to it for
any liabilities under federal, state or foreign securities laws resulting from
such offering. The aggregate principal amount of the new Certificates issued in
connection with any Refinancing shall be the same as the aggregate principal
amount outstanding on the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days' prior written notice of the scheduled closing
date of such Refinancing and the Owner Participant shall have been provided such
longer period as it shall have required for a reasonable opportunity to review
the relevant documentation and the Owner Participant shall have determined in
good faith that neither it nor the Owner Trustee shall suffer any loss or
expense or bear any increased risk as a result of such Refinancing (including,
without limitation, any risk with respect to taxes or other adverse consequences
to the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for which it has not been or will not
have been indemnified by the Lessee in a manner reasonably satisfactory to the
Owner Participant and, if an additional indemnity is then provided by the Lessee
as the result of such Refinancing and the Owner Participant or the Indenture
Trustee reasonably deems itself insecure with respect to such indemnity, the
Lessee shall have provided security or collateral for such indemnity which is
reasonably satisfactory to such Person nor would such transaction materially and
adversely affect the rights and obligations of Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule setting
forth each installment of Basic Rent and setting forth Stipulated Loss Values
and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3(d) of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have no
obligation to proceed with any Refinancing transaction as contemplated by this
Section 15.01 unless the Lessee indemnifies the Owner Trustee and the Owner
Participant by agreement in form and substance satisfactory to each of them, for
any liability, obligation (other than the obligation to pay principal and
interest in respect of the refinanced indebtedness), cost or expense (including,
without limitation, reasonable attorneys' fees and Make-Whole Premium or other
amounts due under the Indenture), including any adverse tax consequences or
impact, related to or arising out of any such Refinancing transaction and, if
the Owner Participant reasonably deems itself insecure with respect to such
indemnity, the Lessee shall have provided security or collateral for such
indemnity which is reasonably satisfactory to the Owner Participant.
(d) Without the prior written consent of the Owner Participant, which
consent may be withheld in its sole discretion, no such refinancing shall (1)
cause the aggregate principal amount of the indebtedness to be substituted for
the Certificates to exceed the aggregate principal amount of the then
outstanding Certificates, (2) cause the weighted average life of such
indebtedness to be different by more than three months than the remaining
weighted average life of the then outstanding Certificates, or (3) cause the
date of maturity of such indebtedness to be later than the date of maturity of
the Certificates being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall be
subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium
and breakage costs, if any, and all other sums due and owing on the
Certificates payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing
by the Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Certificates then outstanding shall have been made
by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have
agreed to provide an indemnity in respect thereof reasonably
satisfactory in form and substance to the Owner Participant),
certificates and other documents as it may reasonably request, each in
form and substance reasonably satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the
Owner Participant, as Supplemental Rent under the Lease, sufficient
funds to pay any breakage costs, Make-Whole Premium and any other
amounts due under the Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such
party's obligations under this Section 15.01;
(vii) No Specified Default shall exist or would occur
immediately after giving effect to such Refinancing;
(viii) In the event the Lessee shall not prohibit the purchase
of the Refinancing loan certificates by, or with the assets of, an
employee benefit plan, as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA or a plan or individual retirement account,
which is subject to Section 4975(c) of the Code, (individually or
collectively, an "ERISA Plan"), the Lessee will permit the placement of
the Refinancing loan certificates with an ERISA Plan only if either (A)
if such placement is in the form of pass-through certificates, the sole
underwriter or the manager or co-manager of the underwriting syndicate
or the selling or placement agent of such pass-through certificates
represents to the Lessee that it has a prohibited transaction exemption
from the U.S. Department of Labor with respect to Pass-Through
certificates (such as Prohibited Transaction Exemption 89-88 or any
other comparable exemption) or (B) purchasers of the Refinancing loan
certificates (or if the Refinancing involves the issuance and sale of
pass-through certificates, purchasers of such pass-through
certificates) provide a representation (which may be in the form of a
deemed representation) regarding their source of funds used in
acquiring the Refinancing loan certificates (or such pass-through
certificates, as the case may be) and, if such purchasers represent
that they are using funds of an ERISA Plan in acquiring the Refinancing
loan certificates (or such pass-through certificates, as the case may
be), such purchasers further represent that (1) either they are relying
on a prohibited transaction exemption from the U.S. Department of Labor
with respect to their purchase and holding of the Refinancing loan
certificates (or such pass-through certificates, as the case may be)
and they provide representations regarding the satisfaction of the
relevant conditions of such an exemption or (2) their purchase and
holding of the Refinancing loan certificates (or such pass-through
certificates, as the case may be) will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code. The reliance on any such exemption will not be conditional on
the Owner Participant's representation concerning its party in interest
or other status with respect to ERISA Plans; and
(ix) The Lessee shall pay all costs and expenses (including
legal fees) incurred in connection with any proposed or actually
consummated Refinancing.
. (a) Upon the Lessee's request, at the Lessee's expense, and subject to the
conditions in Section 15.02(c), the Owner Trustee, any Owner Participant, the
Lessee and the Indenture Trustee will cooperate with each other to reoptimize
(but not more than twice) the unpaid principal of the outstanding Certificates
and the amortization schedule therefor in connection with any adjustments to
Basic Rent, EBO Price, EBO Date, Stipulated Loss Values, and Termination Values
pursuant to ss. 3(d) of the Lease as a result of a Refinancing of the
Certificates in accordance with Section 15.01 hereof, provided that, in any such
reoptimization, (1) the outstanding principal amount of the Certificates shall
not be increased, (2) the final maturity of the Certificates shall not be
extended, (3) the average life to maturity of the Certificates shall not vary
from the average life to maturity of the initial Certificates by more than three
months, (4) any installment of principal of the Certificates will not vary by
more than 5% from such installment in the initial Loan Certificate, (5) there
shall be no change in the Debt Portion, (6) the adjusted Stipulated Loss Values
and Termination Values shall not exceed the original Stipulated Loss Values and
Termination Values under the Lease (as adjusted in accordance with clauses (1)
and (2) of ss. 3(d) of the Lease), and (7) any change to the EBO Price or EBO
Date must be supported by an appraisal reasonably satisfactory to the Owner
Participant. As promptly as practicable following such request, the Owner
Participant shall deliver to the Lessee, the Owner Trustee, and the Indenture
Trustee, a certificate of an authorized representative of the Owner Participant
(the "Reoptimization Certificate") setting forth (x) the amortization schedules
which, taking into account the requirements of ss. 3(d) and (e) of the Lease,
would result in the lowest Net Present Value of Rents, and the lowest net
present value (to the Lessee) of Basic Rent over the Basic Term, discounted
semi-annually at the Debt Rate, and (y) the corresponding changes in Basic Rent,
EBO Price, EBO Date, Stipulated Loss Values, and Termination Values, computed in
a manner consistent with ss. 3(d) of the Lease. Upon the Lessee's acceptance of
the adjustments set forth in the Reoptimization Certificate, or the
redetermination thereof pursuant to the verification procedures in ss. 3(d) of
the Lease, and subject to compliance in full with the conditions set forth in
Section 15.02(c), the Owner Participant shall (aa) deliver a copy of the
Reoptimization Certificate to the Owner Trustee, and the Indenture Trustee, and
(bb) cause the Owner Trustee (xx) to execute and deliver amendments to the Lease
and Indenture setting forth the adjustments (the date of such amendment, being
the "Reoptimization Date"), and (yy) to issue or exchange new Certificates
containing the revised amortization thereof for the outstanding Certificates.
The Lessee shall give to the Owner Participant at least 30 days' prior written
notice of the Lessee's intent to effect a reoptimization hereunder. Such notice
shall be revocable, and need not specify any particular date as of which such
reoptimization shall be effected.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate then
held by such holder, which Refinancing Certificates shall be surrendered to the
Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of such
Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms identical
to, except as otherwise contemplated by Section 15.02(d) hereof, the Refinancing
Certificates originally issued in connection with the Operative Agreements.
(c) Conditions. Any such reoptimization shall be subject to the
satisfaction of the following conditions:
(1) no Specified Default shall exist;
(2) appropriate agreements, amendments, or supplements, in
form and substance reasonably satisfactory to the Lessee, the Owner
Participant, the Owner Trustee, and the Indenture Trustee, shall be
executed and delivered;
(3) Basic Rent, EBO Price, EBO Date, Termination Values, and
Stipulated Loss Values shall, subject to ss. 3(e) of the Lease, be
adjusted in the manner set forth in ss. 3(d) of the Lease;
(4) all necessary authorization, approvals, consents, and
recordings (including any recordings or filings with the FAA) shall be
obtained or accomplished; and
(5) neither the Owner Participant nor the Owner Trustee nor
the Indenture Trustee shall suffer any loss or expense or adverse tax
or other consequences (including with respect to matters arising under
ERISA and any adverse tax consequences resulting from the application
of Revenue Procedure 75-21 or 75-28 or Code ss. 467) or bear any
increased risk (including, with respect to the Owner Participant and
the Owner Trustee, any material risk of a change in accounting
treatment of the Lease) as a result of such reoptimization for which
the Lessee has not agreed to indemnify in a manner reasonably
satisfactory to such Person, and, in connection with the foregoing,
(aa) the Owner Participant shall be entitled to receive an opinion
(reasonably satisfactory to the Owner Participant) of counsel (selected
by the Owner Participant and reasonably satisfactory to the Lessee) of
any adverse tax or other consequences resulting from such
reoptimization, and (bb) the Owner Participant shall be entitled to
receive an opinion of the accounting firm regularly used by the Owner
Participant of any material risk of a change in accounting treatment of
the Lease resulting from such reoptimization.
ARTICLE 16
CONFIDENTIALITY
Section 16.01. Confidentiality. Each party hereto agrees (on behalf of
itself and each of its Affiliates, agents, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, the Operative Agreements other than the Lease, the Lease
Supplement, the Indenture, the Indenture Supplement, and FAA ▇▇▇▇ of Sale (the
"Confidential Documents") and any non-public information supplied to it pursuant
to this Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such Confidential Document or
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the parties hereto, (iii) to bank
examiners or similar regulatory authorities, auditors or accountants, (iv) in
connection with any litigation to which any one or more of the parties hereto is
a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to an Affiliate of the parties hereto, (vi) to any
assignee or participant (or prospective assignee or participant) or other
transferee so long as such assignee or participant (or prospective assignee or
participant) or other transferee first executes and delivers to the respective
party making such assignment or participation an agreement in writing to be
bound by the provisions of this Section 16.01 or (vii) in the case of the Owner
Participant or the Owner Trustee (in its individual or trust capacity) to the
Owner Trustee (in its individual or trust capacity) or to the Owner Participant,
as the case may be.
ARTICLE 17
MISCELLANEOUS
Section 17.01. Reserved.
Section 17.02. Collateral Account. (a) The Indenture Trustee shall
notify the Owner Trustee and the Lessee of any losses incurred on the Specified
Investments in the Collateral Account promptly upon the realization thereof, as
well as any fees, commissions and other costs, Taxes (other than income taxes)
and expenses, if any, incurred by the Indenture Trustee in connection with its
administration of the Collateral Account (collectively, "Losses"). Promptly upon
receipt of such notification but, in any event, no later than the earlier of the
Delivery Date (or, if later, the last day of any investment period referred to
in Section 2.14(b) of the Indenture during which the Delivery Date occurs) and
the 15th day after the Cut-Off Date, the Lessee shall pay to the Indenture
Trustee, on behalf of the Owner Trustee, for deposit into the Collateral
Account, an amount equal to such Losses (net of any investment earnings not
previously applied pursuant to this Section 17.02).
(b) The Lessee shall pay to the Indenture Trustee (or will provide for
payment thereof pursuant to a permitted drawing by the Indenture Trustee under
the Letter of Credit), on behalf of the Owner Trustee (A) on each Payment Date
prior to the Delivery Date an amount equal to the aggregate amount of interest
accrued on the Certificates from (and including) the Certificate Closing Date or
previous Payment Date, as the case may be, to, but excluding, such Payment Date
(net of any investment earnings in the Collateral Account not previously applied
pursuant to this Section 17.02) and (B) on the Delivery Date, interest accrued
on the Certificates from and including the last Payment Date (or, if none, the
Certificate Closing Date), to, but excluding, the Delivery Date (net of any
investment earnings in the Collateral Account not previously applied pursuant to
this Section 17.02) (and the Indenture Trustee shall provide the Lessee prior
written notice of any such amount due from the Lessee on any such Payment Date
or the Delivery Date). In addition, the Lessee will pay to the Indenture Trustee
on behalf of the Owner Trustee all amounts owed by the Owner Trustee pursuant to
clause (b) of the last paragraph of Section 2.04 of the Indenture.
(c) If the Aircraft has not been purchased by the Owner Trustee on or
before the Cut-Off Date and the Certificates have not been assumed by the Lessee
in accordance with Section 3.05(a) hereof, the Lessee agrees to pay to the
Indenture Trustee, on behalf of the Owner Trustee, on the 15th day following the
Cut-Off Date the excess, if any, of the amounts payable under Section 6.02(b)(1)
of the Indenture over the amounts released from the Collateral Account under
Section 2.16 of the Indenture.
(d) All amounts payable by the Lessee pursuant to this Section 17.02
shall be paid to the Indenture Trustee at its principal office at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Department, or as the Indenture Trustee may otherwise direct within the United
States, by wire transfer of immediately available funds in U.S. Dollars no later
than 10:30 a.m., New York City time, on the due date of such payment.
Section 17.03. Counterparts. This Agreement may be executed by the
parties 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 17.04. No Oral Modifications. Neither this Agreement nor any of
its terms may be terminated, amended, supplemented, waived or modified orally,
but only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification is
sought. No such written termination, amendment, supplement, waiver or
modification shall be effective unless a signed copy shall have been delivered
to and executed by the Owner Trustee and the Indenture Trustee. A copy of each
such termination, amendment, supplement, waiver or modification shall also be
delivered to each other party to this Agreement.
The consent of each of the Pass-Through Trustee and the Subordination
Agent, in its capacity as a party to this Agreement and not as a Holder, shall
not be required to modify, amend or supplement this Agreement or to give any
consent, waiver, authorization or approval with respect to this Agreement under
the circumstances in which the consent of the Indenture Trustee would not be
required for such modification, amendment, supplement, consent, waiver or
approval in accordance with Section 8.01(b) of the Indenture, provided that the
Pass-Through Trustee shall be entitled to receive an Opinion of Counsel (as
defined in the Pass-Through Agreement) necessary, in its sole discretion, to
establish that the Indenture Trustee's consent would not be required under such
circumstances.
Section 17.05. Captions. The table of contents preceding this Agreement
and the headings of the various Articles and Sections of this Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner Trustee (and any additional owner trustee
appointed) under the Trust Agreement, the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under the
Indenture and the Pass-Through Trustee and its successors as Pass-Through
Trustee (and any additional Pass-Through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and the
Pass-Through Trustee. Each of SSB and FNBM is entering into this Agreement
solely in its capacities (except to the extent otherwise expressly indicated),
in the case of SSB, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, in the case of FNBM, not in its individual capacity
but solely as Indenture Trustee under the Indenture and as Pass-Through Trustee
under the Pass-Through Agreement, and except as otherwise expressly provided in
this Agreement or in the Lease, the Indenture, the Pass-Through Agreement or the
Trust Agreement, neither SSB nor FNBM shall be personally liable for or on
account of its statements, representations, warranties, covenants or obligations
under this Agreement; provided, however, that each of SSB and FNBM accepts the
benefits running to it under this Agreement, and each agrees that (except as
otherwise expressly provided in this Agreement or any other Operative Agreement
to which it is a party) it shall be liable in its individual capacity for (a)
its own gross negligence or willful misconduct (whether in its capacity as
trustee or in its individual capacity), (b) any breach of representations and
warranties or any breach of covenants made in its individual capacity pursuant
to or in connection with this Agreement or the other Operative Agreements to
which it is a party, (c) any breach, in the case of the Owner Trustee, of its
covenants contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure
to use ordinary care in receiving, handling and disbursing funds, (e) in the
case of the Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens,
and (g) taxes, fees or other charges on, or based on, or measured by, any fees,
commissions or compensation received by it in connection with the transactions
contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws requirements,
other regulatory requirements and other legally compelled disclosures), so long
as there shall not have occurred an Event of Default or Indenture Event of
Default, each party to this Agreement shall in each instance obtain the prior
written approval of each other party to this Agreement concerning the exact text
and timing of news releases, articles and other information releases to the
public media concerning any Operative Agreements [; provided that the Lessee
may, without the prior written approval of each other party hereto, make such
disclosures and announcements concerning its fleet constitution as are customary
in the airline industry so long as no such disclosure or announcement
specifically identifies any other party hereby by name without the prior written
consent of such party].
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass-Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the reorganization
provisions of the Bankruptcy Code or any other applicable bankruptcy or
insolvency statutes, (ii) pursuant to any such reorganization provisions, the
Owner Participant is held to have recourse liability to the debtor, the Owner
Trustee or the trustee of the debtor directly or indirectly on account of any
amount payable as Make-Whole Premium, principal or interest on the Certificates,
or any other amount payable on any Certificate that is provided in the Operative
Agreements to be nonrecourse to the Owner Participant and (iii) the Indenture
Trustee actually receives any Recourse Amount which reflects any payment by the
Owner Participant on account of (ii) above, then the Indenture Trustee shall
promptly refund to the Owner Participant such Recourse Amount. For purposes of
this Section 17.10, "Recourse Amount" means the amount by which the portion of
such payment by the Owner Participant on account of clause (ii) above received
by the Indenture Trustee exceeds the amount which would have been received by
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 the Indenture Trustee from enforcing any individual obligation
(and retaining the proceeds thereof) of the Owner Participant under this
Agreement or, any other Operative Agreement to the extent herein or therein
provided, for which the Owner Participant has expressly agreed by the terms of
this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
SATE OF NEW YORK, AND 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, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
Section 17.12. Section 1110 Compliance. The parties hereto agree that
the transactions contemplated by the Operative Agreements are expressly intended
to be, shall be, and should be construed so as to be entitled to the benefits
and protection of Section 1110 of the Bankruptcy Code.
Section 17.13. Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party (and of each covenant herein made by such party to each Liquidity
Provider), and that each Liquidity Provider may rely on such representations,
warranties and covenants to the same extent as if such representations,
warranties and covenants were made to such Liquidity Provider directly. The
terms of this Agreement shall inure to the benefit of each Liquidity Provider,
their respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this __ day of September, 1997.
Lessee:
ATLANTIC COAST AIRLINES
By:
Name:
Title:
By:
Name:
Title:
Initial Owner Participant:
ATLANTIC COAST AIRLINES
By:
Name:
Title:
By:
Name:
Title:
Owner Trustee:
STATE STREET BANK
AND TRUST COMPANY
OF CONNECTICUT,
NATIONAL
ASSOCIATION not in
its individual
capacity, except
as otherwise
expressly provided
herein but solely
as Owner Trustee
By:
Name:
Title:
Indenture Trustee:
THE FIRST NATIONAL
BANK OF MARYLAND,
not in its
individual
capacity except as
otherwise
expressly provided
herein, but solely
as Indenture
Trustee
By: ,
Name:
Title:
Pass-Through Trustee:
THE FIRST NATIONAL
BANK OF MARYLAND,
not in its
individual
capacity except as
otherwise
expressly provided
herein, but solely
as Pass-Through
Trustee
By:
Name:
Title:
Subordination Agent:
THE FIRST NATIONAL
BANK OF MARYLAND,
not in its
individual
capacity except as
otherwise
expressly provided
herein, but solely
as Subordination
Agent
By:
Name:
Title:
SCHEDULE II
CERTIFICATE INFORMATION
1 Atlantic Coast Airlines 1997-1 Pass-Through Trust Class A Atlantic Coast Airlines Trust No. _____
---------------------------------------
Interest Rate:
Maturity:
Principal Amount:
2. Atlantic Coast Airlines 1997-1 Pass-Through Trust Class B Atlantic Coast Airlines Trust No._____
Interest Rate:
Maturity:
Principal Amount:
3. Atlantic Coast Airlines 1997-1 Pass-Through Trust Class C Atlantic Coast Airlines Trust No. _____
Interest Rate:
Maturity:
Principal Amount:
4. Atlantic Coast Airlines 1997-1 Pass-Through Trust Class D Atlantic Coast Airlines Trust No. _____
Interest Rate:
Maturity:
Principal Amount:
SCHEDULE III
DEBT PORTION
Debt Portion
SCHEDULE IV
MANDATORY ECONOMIC TERMS
Any amendment and restatement of the Operative Documents on the
Delivery Date or, if earlier, the Transfer Date shall require that:
(i) with respect to each series of Certificates issued with
respect to the Aircraft the schedule of principal payments may
be changed but:
(a) the final maturity may not be extended beyond January
1, 2014, for the Series A Certificates, January 1,
2011, for the Series B Certificates, January 1, 2007,
for the Series C Certificates, and January 1, 2000,
for the Series D Certificates;
(b) the average life of any series of Certificates may
not be so great as to cause the average life of the
corresponding Class of Pass-Through Certificates to
be more than 10.2 years in the case of Class A
Pass-Through Certificates, 8.3 years in the case of
Class B Pass-Through Certificates, 5.6 years in the
case of the Class C Pass-Through Certificates and 1.0
years in the case of Class D Pass-Through
Certificates (but in each case may be decreased by
any amount);
(c) the interest rate and the January 1 and July 1 payment dates may not be changed; and
(d) the loan to aircraft value ratio on any July 1
Distribution Date (as defined in the Pass-Through
Agreement) shall not exceed 35.0% in the case of the
Series A Certificates, 50.0% in the case of the
Series B Certificates, 65.0% in the case of the
Series C Certificates and 70.0% in the case of the
Series D Certificates.
(ii) Basic Rent, Stipulated Loss Values and Termination Values
under the Lease must be sufficient to pay amounts due with
respect to the Certificates;
(iii) the amounts payable under the all-risk aircraft hull insurance
maintained with respect to the Aircraft must be sufficient to
pay the Stipulated Loss Value, subject to rights of
self-insurance; and
(iv) (a) the Past Due Rate in the Indenture and the Lease;
(b) the Make-Whole Premium payable under the Indenture;
(c) the provisions relating to the prepayment and purchase of the Certificates in the
Indenture;
(d) the minimum liability insurance amount on the Aircraft in the Lease; and
(e) the indemnification of the Indenture Trustee,
Subordination Agent, Liquidity Providers,
Pass-Through Trustee and Holders of the Certificates
with respect to certain taxes and expenses;
in each case, must be provided as set forth in the Participation
Agreement, Lease and Indenture, as the case may be as in effect on the
Certificate Closing Date.
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement of the Operative Agreements on the
Delivery Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Indenture so as to deprive the Holders of a
first priority security interest in and mortgage lien on the
Aircraft and the Lease or to eliminate any of the obligations
secured thereby or otherwise modify in any material adverse
respect as regards the interests of the Holders, the
Subordination Agent, the Liquidity Providers or the Indenture
Trustee the provisions of Article II, V, or VI or Section
7.01, 7.02, 7.10, 7.11, 9.08, 13.01, 13.02, 13.07 or 15.04 or
Article VIII of the Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the
Liquidity Providers or the Indenture Trustee the provisions of
Section 3(e), 3(f), 4, 7, 11(a)(i)(dd), 12(c)(1), the second
sentence of 23(f) or 26 of the Lease or otherwise modify the
terms of the Lease so as to deprive the Indenture Trustee of
rights expressly granted to the "Indenture Trustee" therein;
3. May not modify in any material adverse respect as regards the interests of the Holders, the
Subordination Agent, the Liquidity Providers or the Indenture Trustee the provisions of Section
4.02(e), 4.02(f), 17.02, 17.11, 17.12 or 17.13 of the Participation Agreement or of the
provisions of Section 4.01(k) of the Participation Agreement so as to eliminate the requirement
to deliver to the Indenture Trustee the legal opinions to be provided to such Persons
thereunder (recognizing that the lawyers rendering such opinions may be changed) or of the
provisions of Section 6.03(b) of the Participation Agreement as regards the rights of the
Indenture Trustee thereunder or otherwise modify the terms of the Participation Agreement to
deprive the Subordination Agent, the Liquidity Providers or the Indenture Trustee of any
indemnity or right of reimbursement in its favor for Expenses or Taxes.
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Providers or the Indenture
Trustee, the definition of "Make-Whole Premium" or
"Supplemental Rent" in Schedule I to the Participation
Agreement; and
5. Shall contain representations and warranties of the Owner
Participant substantially similar to those set forth on
Exhibit A attached hereto.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, provided that any such action
shall not materially adversely affect the interests of the Holders, the
Subordination Agent, the Liquidity Providers, the Indenture Trustee or the
holders of the Pass Through Certificates.
EXHIBIT A TO SCHEDULE V
Section ___. Representations, Warranties and Covenants of Owner Participant. (a) Representations,
Warranties and Covenants. In addition to and without limiting its other representations and warranties provided
for in this Article __, the Owner Participant represents and warrants that:
(i) it is a corporation duly incorporated and validly existing
in good standing under the laws of the State of __________ and it has
full corporate power, authority and legal right to carry on its present
business and operations, to own or lease its Properties and to enter
into and to carry out the transactions contemplated by this Agreement,
the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements to which it is party;
(ii) the execution, delivery and performance by it of this
Agreement, the Tax Indemnity Agreement, and the Trust Agreement and the
other Operative Agreements to which it is party have been duly
authorized by all necessary corporate action on its part and, assuming
the accuracy of the Lessee's representations in Section 6.01(n) hereof,
do not require any governmental approvals that would be required to be
obtained by the Owner Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(l)(viii), 6.02 and 7.09 hereof and
compliance with Section 10.06 of the Indenture, neither the execution,
delivery or performance by the Owner Participant of the Operative
Agreements to which it is party, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or
results or will result in a breach or violation of any of the terms,
conditions or provisions of, or will require any consent or approval
under any law, governmental rule or regulation applicable to the Owner
Participant or the charter documents, as amended, or bylaws, as
amended, of the Owner Participant or any order, writ, injunction or
decree of any court or governmental authority against the Owner
Participant or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to
which the Owner Participant is a party or by which it or any of its
Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon
any of its Properties;
(iv) the Operative Agreements to which it is party have been
or on the Certificate Closing Date will be duly executed and delivered
by the Owner Participant and constitute or on the Certificate Closing
Date will constitute the legal, valid and binding obligation of the
Owner Participant enforceable against it in accordance with their terms
except as such enforceability may be limited by bankruptcy, insolvency,
or other similar laws or general equitable principles;
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or
violation would have a material adverse effect on the financial
condition, business or operations of the Owner Participant or an
adverse effect on the ability of the Owner Participant to perform its
obligations under this Agreement and the other Operative Agreements to
which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency
or tribunal which are expected to materially adversely affect the
ability of the Owner Participant to perform its obligations under this
Agreement and the other Operative Agreements to which it is or is to be
a party and the Owner Participant knows of no pending or threatened
actions or proceedings before any court, administrative agency or
tribunal involving it in connection with the transactions contemplated
by the Operative Agreements;
(vii) neither the execution and delivery by it of this
Agreement or the other Operative Agreements to which it is a party nor
the performance of its obligations hereunder or thereunder requires the
consent or approval of or the giving of notice to, the registration
with, or the taking of any other action in respect of, any governmental
authority or agency that would be required to be obtained or taken by
the Owner Participant except for filings contemplated by this
Agreement;
(viii) no part of the funds to be used by it to acquire the
interests to be acquired by the Owner Participant under this Agreement
constitutes assets (within the meaning of ERISA and any applicable
rules and regulations) of any employee benefit plan subject to Title I
of ERISA or any applicable regulation thereunder or of any plan or
individual retirement account subject to Section 4975 of the Code; and
(ix) it is a "U.S. Person" as defined in Section 7701(a)(30)
of the Code and is not a tax resident of another country.
Notwithstanding the foregoing or anything else contained in
this Agreement, the Owner Participant makes no representation or
warranty in this Agreement with respect to laws, rules or regulations
relating to aviation or to the nature or use of the equipment owned by
the Owner Trustee, including, without limitation, the airworthiness,
value, condition, workmanship, design, patent or trademark
infringement, operation, merchantability or fitness for use of the
Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents, warrants
and covenants that there are no Lessor's Liens attributable to it (or an
Affiliate thereof) and that there will not be any Lessor's Lien attributable to
it (or an Affiliate thereof) on the Certificate Closing Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass-Through Trustee that the Owner Participant
will, at its own cost and expense, take such action as may be necessary to duly
discharge and satisfy in full, promptly after the same first becomes known to
the Owner Participant, any Lessor's Lien attributable to the Owner
Participant(or an Affiliate thereof), provided, however, that the Owner
Participant shall not be required to discharge or satisfy such Lessor's Lien
which is being contested by the Owner Participant in good faith and by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Aircraft or the Lessor's Estate or
the Trust Indenture Estate or any interest in any thereof or otherwise
materially adversely affect the validity or priority of the Lien of the
Indenture.
(c) Reimbursement. Without limiting any other rights the parties hereto
may have as a result of any breach by the Owner Participant of its obligations
in Section ____(b) hereof, the Owner Participant agrees to reimburse each other
party hereto for all reasonable legal fees and expenses of counsel that may be
incurred by any such party as a result of the failure of the Owner Participant
to discharge and satisfy any such Lessor's Lien in accordance with the terms of
Section ____(b) hereof.
(d) Assignment of Interests of Owner Participant. At any time after the
Delivery Date and subject to Section _____(f) and the conditions set forth in
this Section ____(d), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an institutional
investor all (but not less than all) of the Beneficial Interest, provided that
it gives the Lessee and the Indenture Trustee at least 10 days' notice of such
assignment, conveyance or other transfer and provided that the Owner Participant
and any Owner Participant Guarantor shall remain liable for all obligations of
the Owner Participant under the Trust Agreement and the Operative Agreements to
which the Owner Participant is a party to the extent (but only to the extent)
relating to the period on or before the date of such transfer and provided that
the transferee agrees by a written instrument substantially in the form attached
hereto as Exhibit F-1 to assume liability for all obligations as an Owner
Participant under the Trust Agreement and the other Operative Agreements to
which such Owner Participant is a party relating to the period after the date of
transfer. Any such transferee shall (a) be (i) a bank, savings institution,
finance company, leasing company or trust company, national banking association
acting for its own account or in a fiduciary capacity as trustee or agent under
any pension, retirement, profit sharing or similar trust or fund, insurance
company, fraternal benefit society or corporation acting for its own account
having a combined capital and surplus (or, if applicable, consolidated net worth
or its equivalent) of not less than $50,000,000, (ii) a subsidiary of any Person
described in clause (i) where such Person provides (A) support for the
obligations assumed by such transferee subsidiary reasonably satisfactory to the
Lessee, the Owner Trustee and the Indenture Trustee or (B) an unconditional
guaranty substantially in the form of Exhibit F-2 attached hereto of such
transferee subsidiary's obligations, or (iii) an Affiliate of the transferring
Owner Participant, so long as such Affiliate has a combined capital and surplus
(or, if applicable, consolidated net worth or its equivalent) of not less than
$50,000,000, (b) be legally capable of binding itself to the obligations of the
Owner Participant and shall expressly agree to assume all obligations of the
Owner Participant under the Trust Agreement and this Agreement and (c) provide
representations, warranties, and covenants substantially similar to those
contained in Sections 7.02(a), 7.03(a) and 7.03(f) hereof; provided that,
without the prior written consent of the Lessee (unless an Event of Default
described in ss. 14(a), (b), (f), (g), (h), or (i) of the Lease is continuing),
such transferee shall not be an airline or other aircraft operator or competitor
of the Lessee or an Affiliate of any thereof; and provided further that neither
such transferee nor any Affiliate thereof shall (x) be a party to any litigation
or arbitration (whether as plaintiff or defendant) with the Lessee or any
Affiliate of the Lessee or (y) be attempting a hostile takeover of the Lessee or
any Affiliate of the Lessee. In the event of any such assignment, conveyance or
transfer, the transferee shall become a party to the Trust Agreement and shall
agree to be bound by all the terms of and will undertake all of the obligations
of the Owner Participant contained in the Trust Agreement and the other
Operative Agreements in the manner set forth in the form attached as Exhibit
F-1. A transferee hereunder shall be (i) a "U.S. Person" as defined in Section
7701(a)(30) of the Code (or any successor provision thereto) and such transferee
shall be personally liable for any debt service to the extent that its receipt
of rentals is reduced by reason of any withholding Taxes that result from such
transferee's failure to be such a "U.S. Person" and (ii) a Citizen of the United
States or has established a voting trust, voting powers or other arrangement
reasonably satisfactory to the Indenture Trustee, the Owner Trustee, and the
Lessee to permit the Owner Trustee to be the registered owner of the Aircraft
under the Transportation Code. A transferee hereunder shall not be, and in
acquiring the Beneficial Interest shall not use the assets of, an employee
benefit plan subject to Title I of ERISA or an individual retirement account or
a plan subject to Section 4975 of the Code. Assuming the truth of the
representations made in Sections 6.01(l) and 7.06 hereof and compliance with
Section 10.06 of the Indenture, no such assignment, conveyance or transfer shall
violate any provision of law or regulation or create a relationship which would
be in violation thereof. The Owner Trustee shall not be on notice of or
otherwise bound by any such assignment, conveyance or transfer unless and until
it shall have received an executed counterpart of the instrument of such
assignment, conveyance or transfer. Upon any such disposition by the Owner
Participant to a transferee as above provided, the transferee shall be deemed
the "Owner Participant" or "Trustor" for all purposes of the Operative
Agreements, and shall be deemed to have made all the payments previously made by
its transferor and to have acquired the same interest in the Lessor's Estate as
theretofore held by its transferor; and each reference therein to the "Owner
Participant" or "Trustor" shall thereafter be deemed a reference to such
transferee. No assignment, conveyance or transfer by the Owner Participant of
the Beneficial Interest shall increase the amount of the liability of the Lessee
under Article 8 hereof or under the Tax Indemnity Agreement over the amount of
liability the Lessee would have incurred had such assignment, conveyance or
transfer not occurred. Notwithstanding the other provisions of this Section
___(d), the right of the Owner Participant to assign, convey or transfer the
Beneficial Interest shall be subject to the right of the Lessee to match any
bona fide offer (other than by an Affiliate of the Owner Participant to purchase
the Beneficial Interest). The Lessee agrees that it will reasonably cooperate
with the Owner Participant in effecting an assignment of the Owner Participant's
interests including, without limitation, providing letters to any successor
Owner Participant permitting such successor Owner Participant to rely on any
opinions provided by the Lessee on the Delivery Date. The Owner Participant
shall pay all costs (including the Lessee's costs) in connection with any such
assignment, conveyance or transfer (other than an assignment, conveyance or
transfer which occurs pursuant to the exercise of remedies under Section 15 of
the Lease while an Event of Default is continuing).
(e) Actions with Respect to Lessor's Estate, Etc. The Owner Participant
agrees that it will not take any action to subject the Lessor's Estate or the
trust established by the Trust Agreement, as debtor, to the reorganization or
liquidation provisions of the Bankruptcy Code or any other applicable bankruptcy
or insolvency statute.
(f) ERISA. The Owner Participant agrees and covenants that it will take
no action with respect to its participation in the transactions contemplated
hereby and by the other Operative Agreements which would cause such
participation to be a "Prohibited Transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code or any applicable regulations under such
sections.
(g) Citizenship. The Owner Participant agrees, solely for the benefit
of the Lessee, the Pass-Through Trustee, the Indenture Trustee and the Owner
Trustee, that if at any time on or after the Delivery Date when the Aircraft is
registered or the Lessee proposes to register the Aircraft in the United States
(i) either the Owner Participant shall cease to be, or an event which has been
publicly disclosed has occurred of which the Owner Participant has knowledge and
which will cause the Owner Participant to cease to be, a Citizen of the United
States, and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Transportation Code and
regulations then applicable thereunder (such eligibility to be determined
without regard to any provision of law that permits the U.S. registration of the
Aircraft by restricting where it is based or used), then the Owner Participant
shall give notice thereof to the Lessee, the Owner Trustee and the Indenture
Trustee and shall (at its own expense and without any reimbursement or
indemnification from the Lessee) promptly effect (x) effect a voting trust or
other similar arrangement, (y) transfer in accordance with the terms of this
Agreement and the Trust Agreement all its rights, title and interest in and to
such Trust Agreement, the Lessor's Estate and this Agreement, or (z) take any
other alternative action that would prevent any deregistration, or maintain or
permit the United States registration, of the Aircraft (determined without
regard to any provision of law that permits the U.S. registration of the
Aircraft by restricting where it is based or used). It is agreed that the Owner
Participant shall be liable to pay promptly on request (A) to each of the other
parties hereto any actual damages (but not consequential damages) suffered by
any such other party to the extent the same shall result from the representation
and warranty of the Owner Participant in the first sentence of Section 7.02(a)
hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass-Through Trustee for any damages actually (but not
consequentially) incurred by the Lessee, the Indenture Trustee and the
Pass-Through Trustee as a result of the Owner Participant's failure to comply
with its obligations pursuant to the first sentence of this Section 7.02(c);
provided, that, the foregoing shall not restrict the Pass-Through Trustee or the
Indenture Trustee from asserting against the Owner Participant any damages
actually incurred by the holders of any Pass-Through Certificates. Each party
hereto agrees, upon the request and at the sole expense of the Owner
Participant, to cooperate with the Owner Participant in complying with its
obligations under the provisions of the first sentence of this Section 7.02(c),
but without any obligation on the part of such other party to take any action
believed by it in good faith to be unreasonably burdensome to such party or
materially adverse to its business interests.
Certain of the Lessor's rights under this Lease and in the Aircraft covered
hereby have been assigned to, and are subject to a security interest in favor
of, The First National Bank of Maryland, as Indenture Trustee under a Trust
Indenture and Security Agreement. This Lease has been executed in counterparts;
see ss. 23(e) for information concerning the rights of holders of the various
counterparts.
===================================================================================================================
LEASE AGREEMENT
(Atlantic Coast Airlines Trust No. ___)
dated as of , 199_
between
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Owner Trustee, Lessor
and
ATLANTIC COAST AIRLINES,
Lessee
One Canadair Regional Jet Series 200 ER Aircraft
===================================================================================================================
iii
EX10_50D.DOC 0108996.01
TABLE OF CONTENTS
Page
1. Definitions; Usage.............................................................................................1
(a) Definitions...................................................................................................1
(b) Usage.........................................................................................................1
2. Agreement to Lease Aircraft; Delivery..........................................................................1
(a) Agreement to Lease............................................................................................1
(b) Delivery......................................................................................................1
3. Term and Rent; Voluntary Termination; Renewal..................................................................1
(a) Term..........................................................................................................1
(b) Basic Rent....................................................................................................1
(c) Supplemental Rent.............................................................................................1
(d) Adjustments to Basic Rent, EBO, SLV, and TV After the Delivery Date...........................................2
(e) Minimum Rent..................................................................................................2
(f) Payment.......................................................................................................3
(g) Voluntary Termination.........................................................................................3
(h) Renewal Option................................................................................................5
(i) Termination with Respect to Engines...........................................................................5
4. Net Lease......................................................................................................5
5. Return of Aircraft.............................................................................................6
6. Lessor Disclaimer..............................................................................................6
7. Ownership by Lessor............................................................................................7
8. Liens..........................................................................................................7
9. Registration; Maintenance; Records; Compliance and Use; Replacement Parts; Improvements; Pooling of Parts;
Insignia..........................................................................................................7
(a) Registration..................................................................................................7
(b) Maintenance; Records..........................................................................................7
(c) Compliance and Use............................................................................................8
(d) Replacement of Parts..........................................................................................8
(e) Improvements..................................................................................................9
(f) Pooling of Parts.............................................................................................10
(g) Insignia.....................................................................................................10
10. Inspection...................................................................................................10
11. Loss or Destruction; Requisition of Use......................................................................11
(a) Event of Loss to the Airframe................................................................................11
(b) Event of Loss to an Engine...................................................................................13
(c) Risk of Loss; No Release of Obligations......................................................................13
(d) Requisition of Use...........................................................................................13
(e) Application of Proceeds for Events of Loss...................................................................14
(f) Payments During Default......................................................................................14
12. Insurance....................................................................................................15
(a) Liability Insurance..........................................................................................15
(b) Casualty Insurance...........................................................................................15
(c) Endorsements.................................................................................................15
(d) Reports, etc.................................................................................................16
(e) Other Insurance..............................................................................................16
(f) Indemnification by United States Government..................................................................16
13. Subleasing; Possession.......................................................................................16
(a) Subleasing, Pooling, etc.....................................................................................16
(b) Security Assignment of Subleases.............................................................................18
(c) Lessor Waiver................................................................................................18
14. Events of Default............................................................................................19
15. Remedies.....................................................................................................20
(a) Generally....................................................................................................20
(b) Expenses.....................................................................................................21
(c) Lessee Waiver................................................................................................21
(d) Remedies Cumulative..........................................................................................21
16. Purchase Options.............................................................................................21
(a) Options......................................................................................................21
(b) Purchase.....................................................................................................22
17. Notices......................................................................................................22
18. Successors, Assigns, and Indemnified Parties.................................................................23
19. Lessor's Right to Perform for Lessee.........................................................................23
20. Further Assurances...........................................................................................23
21. Successor Trustee and Rights of Trustee as Lessor............................................................23
22. Capacity of Lessor...........................................................................................24
23. Amendments and Miscellaneous.................................................................................24
(a) Amendments...................................................................................................24
(b) Survival of Agreements.......................................................................................24
(c) Severability.................................................................................................24
(d) Entire Agreement.............................................................................................24
(e) Counterparts.................................................................................................24
(f) Governing Law................................................................................................24
(g) Headings.....................................................................................................24
24. Performance by Sublessee.....................................................................................25
25. Quiet Enjoyment..............................................................................................25
26. Security For Lessor's Obligations............................................................................25
27. Submission to Jurisdiction; Venue............................................................................25
Schedule I - Definitions
Exhibit A - Lease Supplement
Exhibit B - Financial Terms
Exhibit C - Stipulated Loss Values
Exhibit D - Termination Values
Exhibit E - Lists of Countries
Exhibit F - Return Conditions
25
LEASE AGREEMENT
(Atlantic Coast Airlines Trust No. ___)
This Lease Agreement (Atlantic Coast Airlines Trust No. ___) is entered
into as of ___________, 199_ by State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, not in its
individual capacity, except as expressly set forth herein, but solely as owner
trustee under the Trust Agreement as defined in ss. 1(a) of this Agreement (the
"Lessor"), and Atlantic Coast Airlines, a California corporation (the "Lessee").
. 1. Definitions; Usage
. Unless the context otherwise requires, the capitalized terms herein shall have
the meanings given in Schedule I hereto, for all purposes of this Lease and
shall be equally applicable to both the singular and plural forms of the terms
defined.
. Unless the context otherwise requires, any agreement or instrument referred to herein, or the term "Agreement"
or "Lease", means such agreement or instrument as from time to time supplemented and amended. "Including" means
"including but not limited to". "Or" means one or more, or all, of the alternatives listed or described.
"Herein", "hereof", "hereunder", etc. mean in, of, under, etc. this Agreement (and not merely in, of, under, etc.
the section or provision where the reference appears). References to sections, exhibits, and the like refer to
those in or attached to this Agreement unless otherwise specified.
. 2. Agreement to Lease Aircraft; Delivery
. Subject to satisfaction or waiver of the conditions set forth in the
Participation Agreement, on the Delivery Date the Lessor hereby agrees to lease
the Aircraft to the Lessee hereunder, and the Lessee hereby agrees to lease the
Aircraft from the Lessor hereunder, such lease to be evidenced by the execution
by the Lessor and the Lessee of a Lease Supplement.
. The Lessor hereby authorizes one or more persons designated by the Lessee as
the authorized representative or representatives of the Lessor to accept
delivery of the Aircraft. By executing and delivering Lease Supplement No. 1,
Lessee confirms to Lessor that Lessee has, on behalf of the Lessor, duly and
irrevocably accepted delivery of the Aircraft from the Seller in accordance with
Lessee's normal practices under the Purchase Agreement for all purposes of this
Agreement.
. 3. Term and Rent; Voluntary Termination; Renewal
. The basic term of this Lease (the "Basic Term") shall commence on the Delivery
Date and end on the Expiration Date unless this Lease is terminated earlier, or
cancelled, in accordance with its terms.
. The Lessee shall pay to the Lessor, as Basic Rent for the Aircraft on each
Rent Payment Date during the Basic Term, an amount for that Rent Payment Date as
set forth in Exhibit B and allocated to the Payment Period ending on such Rent
Payment Date, if designated as a payment in arrears, or allocated to the Payment
Period commencing on such Rent Payment Date, if designated as a payment in
advance, in each case as specified in Exhibit B, as such amount may be adjusted
pursuant to ss. 3(d) hereof.
. The Lessee shall pay or cause to be paid to the Lessor, or to whomever shall
be entitled to it, any and all Supplemental Rent promptly as the same shall
become due. The Lessee will also pay to Lessor, on demand, to the extent
permitted by applicable law, interest (computed on the basis of a 360-day year
of twelve 30-day months) at the Past Due Rate on any payment of Rent to the
extent not paid when due, for any period during which it is overdue. The
expiration or other termination of the Lessee's obligation to pay Basic Rent
shall not limit or modify the Lessee's obligations to pay Supplemental Rent.
. If (1) prior to the first Rent Payment Date, the aggregate of all Transaction
Costs shall be other than as shown on Exhibit B (unless, if such aggregate
exceeds the amount shown on Exhibit B, the Lessee elects (with the Owner
Participant's consent) to pay such excess directly, in which case the Owner
Participant shall identify those transaction costs payable directly by the
Lessee) or (2) a Refinancing of the Certificates is effected in accordance with
ss. 15 of the Participation Agreement, then the amounts of Basic Rent,
Stipulated Loss Value, and Termination Value, the EBO Price and the EBO Date,
shall be appropriately adjusted upwards or downwards by such amount or amounts
as will (aa) cause the Owner's Economic Return through the EBO Date as well as
the end of the Basic Term to be at least equal to the Owner's Economic Return
computed using the same assumptions (other than the changed assumptions giving
rise to the adjustment in question), constraints (including tax and appraisal
constraints, taking into account the law (with respect to Code ss. 467, any
proposed regulation issued thereunder or administrative interpretation thereof)
applicable at the time of adjustment), and methodology originally used by the
Owner Participant in computing Basic Rent, Stipulated Loss Values, Termination
Values, and the EBO Price, and (bb) to the extent consistent with the preceding
clause (aa), minimize the Net Present Value of Rents to the Lessee. Stipulated
Loss Values, Termination Values, and the EBO Price also shall be adjusted to
reflect any loss, recapture, or unavailability of Assumed Tax Benefits (as
defined in the Tax Indemnity Agreement).
Any such adjustment of Basic Rent, EBO Price, EBO Date, Stipulated Loss
Values, or Termination Values shall be determined in good faith by the Owner
Participant, subject to verification on a confidential basis by the Lessee and
▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., or such other financial advisor chosen by the Lessee and
shall be effective as soon as possible. Such adjustment shall be evidenced by
the execution and delivery by the Lessor and the Lessee of a lease amendment,
but failure to execute and deliver such an amendment shall not prevent or delay
the effectiveness of the adjustment required by the preceding paragraph. If
requested by the Lessee, any computation of the amount payable by the Lessee
under this ss. 3(d) shall be provided by the Owner Participant to the Lessee in
a notice setting forth in reasonable detail the computations and methods used in
computing such amount (not including confidential methodology and assumptions).
Within 30 days following the Lessee's receipt of such notice, the Lessee may
request that a "Big 6" (or successor) accounting firm or nationally recognized
lease advisory firm selected by the Owner Participant and reasonably
satisfactory to the Lessee (the "Verifying Firm"), verify whether the
calculations submitted by the Owner Participant are based on the correct
assumptions and are mathematically correct. The Verifying Firm shall enter into
a confidentiality agreement reasonably acceptable to the Owner Participant and
shall be requested to make its determination within 30 days. The Owner
Participant shall provide to the Verifying Firm, on a confidential basis, within
three days of its appointment, all the information within the possession or
control of the Owner Participant and reasonably necessary for the verification
of the Owner Participant's calculation (including any and all related
confidential methodology and assumptions); provided that the Verifying Firm
shall not release such confidential methodology or assumptions or other
confidential information except as and to the extent permitted in such
confidentiality agreement. If the Verifying Firm determines that such
computations are inaccurate or based on incorrect assumptions, then the
Verifying Firm shall determine what it believes to be the appropriate
computations. The Verifying Firm shall make available for inspection by the
Lessee and the Lessor such Verifying Firm's working papers and shall discuss the
verification with the Lessor. In the absence of manifest error, such
verification shall be final and binding on the parties hereto. The costs and
expenses of such verification shall be paid by the Lessee unless, as result of
such verification, the Owner Participant's computation of the Net Present Value
of Rents or the EBO Price is adjusted by more than $10,000 in favor of the
Lessee (in which case the Owner Participant shall pay such costs and expenses).
The Lessor and the Lessee shall execute and deliver an amendment to this Lease
to reflect each such adjustment under this ss. 3(d).
. Notwithstanding any other provisions of the Operative Agreements to the
contrary, both before and after giving effect to any adjustment referred to in
this ss. 3, under any circumstances and in any event, (1) Stipulated Loss Value
and Termination Value, and the EBO Price, on any date, shall be an amount at
least sufficient to pay in full on that date the aggregate unpaid principal
amount of the Certificates then scheduled to be outstanding, as adjusted
pursuant to ss. 15 of the Participation Agreement, and accrued and unpaid
interest (assuming interest has been timely paid) and any Make-Whole Premium
thereon, and (2) Basic Rent payable on any Rent Payment Date shall (without
giving effect to any acceleration of the Certificates as a result of an
Indenture Event of Default) at least equal the aggregate amount of principal and
interest scheduled to be paid on the Certificates outstanding on such Rent
Payment Date, as adjusted pursuant to ss. 15 of the Participation Agreement.
. All payments of Rent hereunder shall be made in immediately available funds
and in U.S. dollars no later than 12:00 noon, New York City time, on the date
payable hereunder. So long as any Certificate is outstanding, all Rent due or to
become due hereunder (other than Excepted Payments) shall be paid to the
Indenture Trustee in accordance with the payment instruction set forth in
Schedule II to the Participation Agreement or at such other address in the
United States or to such other Person as the Indenture Trustee shall direct by
written notice to the Lessee. All Excepted Payments and, upon payment of all
outstanding Certificates, all payments of Rent thereafter made hereunder, shall
be paid to the Lessor or, in the case of any payment of Supplemental Rent
expressly payable to a Person other than Lessor, to such other Person, as
appropriate, in accordance with the payment instructions set forth in Schedule
II to the Participation Agreement or at such other address or to such further
Person as the Lessor or such other Person shall direct by written notice to the
Lessee, except that all indemnity payments under any Operative Agreement shall
be paid to the appropriate Indemnitee at its payment address set forth in the
Participation Agreement or as otherwise directed by such Indemnitee by written
notice to the Lessee. If any date on which any Rent becomes payable is not a
Business Day, then the applicable payment of Rent shall be made on the following
Business Day without additional interest or penalty (provided that payment is
made on such following Business Day).
. So long as no Specified Default shall have occurred and be continuing, the
Lessee shall have the right at its option (not exercisable more than twice) to
terminate this Lease, on any Rent Payment Date occurring after the fifth
anniversary of the Delivery Date (a "Termination Date"), on at least 120 days'
prior written notice given by the Lessee to the Lessor, provided that the Lessor
has received a certificate from the president or chairman of the board of the
Lessee certifying that the Aircraft is obsolete, surplus to the Lessee's
business, or to be disposed of as part of a program of jet fleet renewal that
has been implemented for valid business reasons and not with a discriminatory
purpose of terminating only the Aircraft and aircraft under Related Leases. That
notice shall specify the Payment Date on which the Lessee intends to terminate
this Lease in accordance with this ss. 3(g). The Lessee shall have the right to
revoke its notice of termination (but not more than twice) not less than 5 days
prior to the Termination Date so specified.
Until the 60th day before the proposed Termination Date, the Lessor may
notify the Lessee that the Lessor elects to take possession of the Aircraft on
the Termination Date instead of receiving any payment of Termination Value. In
that event, the Lessee shall have no obligation to obtain bids under this ss.
3(g).
Commencing on the date the Lessee gives such notice, the Lessee (or a
Person authorized by the Lessee, acting as agent for the Lessor for a
commercially reasonable commission) shall use commercially reasonable efforts to
obtain the highest bid for the cash purchase of the Aircraft on or before the
Termination Date. The Lessee shall have no liability to the Lessor or any other
Person for failure to obtain the best price for the Aircraft, shall act in its
sole discretion, and shall be under no duty to solicit bids publicly or in any
particular market. The Manufacturer or an Affiliate thereof, the Owner
Participant, and any Person contacted by the Lessor or the Owner Participant may
submit a bid. The Lessee shall certify to the Lessor in writing the amount and
terms of each bid submitted to the Lessee, and the name and address of the party
or parties submitting such bid. Neither the Lessee nor any Affiliate of the
Lessee may (directly or through any agreement with any other Person concerning
the purchase or use of the Aircraft by the Lessee) bid for or buy the Aircraft
under this ss. 3(g).
If the Lessor exercises its option to take possession of the Aircraft
as provided above, then, provided the Lessee does not exercise its right to
revoke its notice of termination, on the Termination Date, (x) the Lessor shall
pay the then-unpaid principal amount of all Certificates then outstanding, and
all interest thereon; and (y) the Lessee shall pay any Make-Whole Premium on the
Certificates, and shall deliver the Aircraft to or at the direction of the
Lessor in the same manner and condition as if delivery were made to the Lessor
pursuant to ss. 5 and shall pay to the Lessor (A) any unpaid Basic Rent in
respect of Rent Payment Dates occurring before the Termination Date (less, if
the Termination Date is not a Rent Payment Date, the pro rata portion of Basic
Rent payable in advance in respect of the period commencing on the Termination
Date and ending on the next Rent Payment Date), plus (B) either (i) if the
Termination Date is a Rent Payment Date, that portion of Basic Rent payable in
arrears on such Rent Payment Date, or (ii) if the Termination Date is not a Rent
Payment Date, that pro rata portion of Basic Rent payable in arrears due on the
following Rent Payment Date in respect of the period commencing on the Rent
Payment Date immediately preceding the Termination Date and ending on the
Termination Date, plus (C) any unpaid Supplemental Rent due on or before the
Termination Date, whereupon the Term shall terminate as of the Termination Date,
and the Lessee's obligation to pay all installments of Basic Rent due after the
Termination Date shall terminate. If the Lessor elects to retain the Aircraft
pursuant to this ss. 3(g), the Lessee shall deliver the Airframe and the Engines
(provided that the Airframe may be delivered with engines meeting the
requirements set forth herein for Replacement Engines in lieu of the Engines so
long as the aggregate number of Engines and engines being delivered with the
Airframe equals two) to the Lessor in the same manner as if delivery were made
to the Lessor pursuant to ss. 5 hereof, and shall duly transfer to the Lessor
right, title and interest to any such engines not owned by the Lessor, all in
accordance with ss. 5. Upon delivery of the Airframe and Engines or engines to
the Lessor and payment by the Lessee of any amounts required to be paid by the
Lessee pursuant to this ss. 3(g), the Lessor will transfer to the Lessee,
without recourse or warranty (except as to the absence of Lessor's Liens), all
of the Lessor's right, title and interest in and to any Engines which were
replaced by engines pursuant to this ss. 3(g), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee,
releasing such Engines from the Lien of the Indenture.
If the Lessor does not exercise its option to take possession of the
Aircraft, then, on the Termination Date, the Lessor shall sell the Aircraft for
immediately available funds to the purchaser named in the highest bid certified
to it by the Lessee, "as is, where is" and without recourse or warranty (except
as to the absence of Lessor's Liens) and subject to the payment of all amounts
due under this ss. 3(g). The total sales price realized at such sale shall be
retained by the Lessor or its assignee and, in addition, on or before the date
of such sale, the Lessee shall pay to the Lessor the sum of (1) the amount, if
any, by which (aa) the Termination Value (including any Make-Whole Premium with
respect to the Certificates), computed as of the Termination Date, exceeds (bb)
the sales price of the Aircraft sold by the Lessor less all reasonable
out-of-pocket expenses incurred by the Lessor and the Owner Participant in
connection with such sale and any sales taxes or similar transfer taxes (and
without deducting any sales commissions or marketing expenses for brokers or
agents engaged by the Lessor unless engaged by the Lessee or a Sublessee on
behalf of, and with the consent of, the Lessor), (2) any unpaid Basic Rent due
before the Termination Date (less, if the Termination Date is not a Rent Payment
Date, the pro rata portion of Basic Rent payable in advance in respect of the
period commencing on the Termination Date and ending on the next Rent Payment
Date), plus (3) either (i) if the Termination Date is a Rent Payment Date, that
portion of Basic Rent payable in arrears on such Rent Payment Date, or (ii) if
the Termination Date is not a Rent Payment Date, the pro rata portion of Basic
Rent payable in arrears due on the following Rent Payment Date in respect of the
period commencing on the Rent Payment Date immediately preceding the Termination
Date and ending on the Termination Date, plus (4) unpaid Supplemental Rent due
on or before the Termination Date. Except as provided in the next paragraph, a
sale of the Aircraft pursuant to this ss. 3(g) shall take place only on a
Termination Date.
If the Lessee revokes its notice of intent to terminate (any such
notice of revocation to be effective only if given at least 5 days before the
Termination Date), or if no sale occurs or the Lessor retention fails to occur
on or before the Termination Date, (x) the Lessee shall reimburse the Lessor,
the Owner Participant, and the Indenture Trustee for any reasonable costs that
such Person incurs in connection with the proposed termination, and (y) this
Lease shall continue in full force and effect, and the Lessee shall have the
right to reinstate the termination procedure described in this ss. 3(g). If no
sale has occurred on the Termination Date because the proposed buyer failed to
purchase on that date, a sale to that buyer may be consummated within 30 days
thereafter, and the Lessee shall be liable for Basic Rent during that period
equal to the daily equivalent (per day) of the average Basic Rent during the
Basic Term. Neither the Lessor nor the Owner Participant shall be under any duty
to solicit bids, to inquire into the efforts of the Lessee to obtain bids, or
otherwise to take action in connection with any sale pursuant to this ss. 3(g),
other than the Lessor's duty to transfer to the purchaser named in the highest
bid certified by the Lessee to the Lessor, "as is, where is", without recourse
or warranty, express or implied (except as to the absence of Lessor's Liens),
all right, title, and interest in and to the Aircraft against receipt of the
payment provided in this ss. 3(g). Effective on full payment of all the
foregoing amounts in connection with the sale or retention of the Aircraft by
the Lessor under this ss. 3(g), the Term shall terminate, and the Lessee's
obligation to pay all installments of Basic Rent due after such payment date
shall terminate, whereupon the Lessee shall deliver the Aircraft to the
purchaser or (in the case of a Lessor retention) to the Lessor.
. Subject to the conditions set forth below in this ss. 3(h), the Lessee, at its
option, may renew this Lease for one or more successive one-year renewal terms
(each a "Renewal Term") not to exceed six years in the aggregate, with each such
Renewal Term to commence upon the expiration of the Basic Term or then-expiring
Renewal Term, as the case may be. This renewal right shall be exercised upon
irrevocable written notice from the Lessee to the Lessor of the Lessee's
election so to renew this Lease given not less than 180 days before the end of
the Basic Term or any Renewal Term. If the Lessee fails to exercise any option
to extend the term of this Lease for any Renewal Term in accordance with the
provisions of this paragraph, all of the Lessee's rights to extend the term
hereof for such Renewal Term and any subsequent Renewal Term shall expire.
All provisions of this Lease shall apply during each Renewal Term,
except that (1) the Lessee shall pay to the Lessor for each semi-annual period
during the Renewal Term, on the applicable Rent Payment Date during that Renewal
Term, an amount equal to (i) with respect to the first two such Renewal Terms,
the lower of (x) $66,000 per month ($396,000 for such semi-annual period and (y)
the Fair Market Rental of the Aircraft for such period and (ii) with respect to
each other such Renewal Term, the Fair Market Rental of the Aircraft for such
period (provided that, if prior to the commencement of the third such Renewal
Period the Lessee provides to the Lessor a "20-20" appraisal reasonably
acceptable to the Lessor, the holder of fixed rate renewals shall be increased
to the number supported by such appraisal; provided further that the total
number of renewal periods shall not exceed six in total), and (2) Stipulated
Loss Value and Termination Value for the Aircraft shall be equal to such Values
as of the last day of the Basic Term.
The Lessee's right to renew this Lease pursuant to this ss. 3(h) shall
be subject to the following conditions: (i) no Specified Default shall exist on
the date of the Lessee's notice of renewal or the date of commencement of the
Renewal Term; and (ii) the Lessee shall have caused to be delivered to the Owner
Participant a residual value agreement which is either (a) a renewal of the RVG
or (b) a residual value agreement that is substantially identical to the RVG or
otherwise fully acceptable to the Owner Participant from or guaranteed by an
institution rated "A" or better by S&P or ▇▇▇▇▇'▇, and which (as to clauses (a)
and (b)) is in an amount which protects the Owner's Economic Return through the
end of the applicable Renewal Term and providing residual value protection as
provided in Exhibit B hereto.
. On any date selected by the Lessee, the Lessee shall have the right at its
option at any time during the Term, if no Specified Default exists, on at least
five Business Days' prior written notice to the Lessor, to terminate this Lease
with respect to any Engine by replacing such Engine, effective the termination
date, by complying with the terms of ss. 11(b) to the same extent as if an Event
of Loss had occurred to such Engine. Such termination and replacement shall
occur simultaneously. Upon the Lessee's compliance with its obligations under
the previous sentence, the Lessor will transfer to the Lessee (or a Person
designated by the Lessee) the Engine so terminated, "as is, where is" without
recourse or warranty, express or implied (except as to the absence of Lessor's
Liens), each such Engine shall no longer be an "Engine," and each such
Replacement Engine substituted therefor shall become an Engine. The Lessee shall
be responsible for any sales taxes or similar transfer taxes resulting from such
replacement.
. This Lease is a net lease, and the Lessee's obligation to pay all costs and
expenses of every character, whether seen or unforeseen, ordinary or
extraordinary, or structural or nonstructural, in connection with the use,
operation, maintenance, repair and reconstruction of the Airframe and each
Engine by the Lessee and the Lessee's obligation to pay all Rent payable
hereunder, and the rights of the Lessor in and to such Rent, shall be absolute
and unconditional and shall not be subject to any abatement, reduction,
suspension, deferment, set-off, or recoupment ("Abatements") for any reason
whatsoever, including Abatements due to any present or future claims of the
Lessee against the Lessor or any other Indemnitee under this Lease or otherwise,
or against any other Person for whatever reason. Except as otherwise expressly
provided herein, this Lease shall not terminate, nor shall the obligations of
the Lessee be affected, by reason of (a) any defect in or damage to, or any loss
or destruction of, the Aircraft or any part thereof, (b) any defect in the
title, airworthiness, condition, design, merchantability, operation, or fitness
for use of the Aircraft or any interest therein, (c) the interference with the
use thereof by any Person, (d) the invalidity or unenforceability or lack of due
authorization of this Lease, any other Operative Agreement, or any instrument or
document executed in connection herewith, (e) any insolvency, bankruptcy,
reorganization, or similar proceeding by or against the Lessee or any Sublessee,
or (f) any other cause, whether similar or dissimilar to the foregoing, and, to
the extent permitted thereby, any present or future law or regulation to the
contrary notwithstanding, it being the express intention of the Lessor and the
Lessee that all Basic Rent payable by the Lessee hereunder shall be, and
continue to be, payable in all events unless the obligation to pay that Basic
Rent is terminated pursuant to the express provisions of this Lease. If for any
reason whatsoever this Lease is terminated in whole or in part by operation of
law or otherwise, except as specifically provided herein, the Lessee nonetheless
agrees, to the extent permitted by law, to pay to the Lessor or to the Person
entitled thereto an amount equal to each Basic Rent payment at the time such
payment would have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part. To the extent permitted
by applicable law, the Lessee hereby waives any and all rights that it may now
have or that at any time hereafter may be conferred upon it, by statute or
otherwise, to terminate, cancel, quit, or surrender this Lease except in
accordance with the express terms hereof. Each payment of Basic Rent made by the
Lessee shall be final, and the Lessee shall not seek to recover all or any part
of such payment for any reason whatsoever, except for any payments made in
error. Notwithstanding the foregoing, the Lessee may assert any claims it may
have against any Person in an independent proceeding.
. Unless the Aircraft is purchased pursuant to ss. 3(g) or 16, at the expiration
of the Term or upon termination of this Lease pursuant to ss. 3(g) or 15, the
Lessee, at its own risk and expense, shall return the Aircraft in accordance
with Exhibit F.
. The Lessor's warranties in the Participation Agreement are in lieu of all
other warranties of the Lessor with respect to the Aircraft, and the Lessor
shall not be deemed to have modified in any respect the Lessee's obligations
pursuant to ss. 4, which obligations are absolute and unconditional. LESSOR
LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE ACKNOWLEDGES AND
AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, THE INDENTURE TRUSTEE AND THE
OWNER PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF,
(ii) THE AIRFRAME AND ENGINES ARE OF A DESIGN, CAPACITY AND MANUFACTURE SELECTED
BY AND ACCEPTABLE TO LESSEE, (iii) LESSEE IS SATISFIED THAT THE AIRFRAME AND
EACH ENGINE ARE SUITABLE FOR THEIR RESPECTIVE PURPOSES AND (iv) NONE OF LESSOR,
THE INDENTURE TRUSTEE, OR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE
DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART
THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINEOR ANY PART THEREOF,
WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY LIABILITY, RIGHT,
CLAIM, REMEDY OR OBLIGATION WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR IMPUTED) OF LESSOR, THE INDENTURE TRUSTEE OR THE OWNER
PARTICIPANT, ARISING OUT OF OR ATTRIBUTABLE TO THE USE, OPERATION OR PERFORMANCE
OF THE AIRFRAME, ANY ENGINEOR ANY PART.
. The Aircraft is and shall at all times remain the property of the Lessor,
except as otherwise expressly provided in the Operative Agreements.
. The Lessee shall not directly or indirectly create, incur, assume, or suffer
to exist any Lien on or with respect to the Lessor's Estate or this Lease or the
Aircraft, the Airframe or any Engine or any Part or title thereto or any
interest therein except: (a) the rights of the Lessor, the Owner Participant,
the Indenture Trustee, the Holders, and the Lessee as contemplated by the
Operative Agreements, (b) the rights of others under agreements or arrangements
to the extent permitted by ss. 9(f) and ss. 13, (c) Lessor's Liens, (d)
Indenture Trustee's Liens, (e) Liens for Taxes either not yet due or being
contested in good faith with due diligence and by appropriate proceedings so
long as there is no material risk of sale, forfeiture, loss, or loss of use of
any Item and so long as such contest does not extend beyond the end of the Term,
(f) inchoate materialmen's, mechanics', worker's, repairer's, employees', or
other like Liens arising in the ordinary course of business and for amounts the
payment of which either is not yet due or is being contested in good faith with
due diligence and by appropriate proceedings so long as there is no material
risk of sale, forfeiture, loss, or loss of use of the Aircraft, the Airframe or
any Engine or any interest therein and so long as such contest does not extend
beyond the end of the Term, (g) any Lien arising out of any judgment or award
with respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith by appropriate proceedings diligently conducted and
with respect to which there shall have been secured a stay of execution pending
such appeal or proceeding for review and so long as such appeal or proceeding
does not extend beyond the end of the Term, and (h) any Lien against which the
Lessee causes to be provided a bond in such amount and under such terms and
conditions as are reasonably satisfactory to the Lessor. The Lessee will
promptly, at its own expense, take or cause to be taken such action as may be
necessary to discharge any Lien which is not permitted by this ss. 8.
9. Registration; Maintenance; Records; Compliance and Use; Replacement Parts; Improvements;
.ooling of Parts; Insignia
. The Lessee shall, at its expense, cause the Aircraft to be duly registered, at
all times (except as provided below and except to the extent that such
registration is prevented by the legal status, or an act or omission, of the
Lessor, the Owner Participant, the Indenture Trustee, or any Holder) from and
after the Delivery Date, in the United States in the Lessor's name (except as
otherwise required by the Transportation Code) under the Transportation Code,
shall not (except as provided below) register the Aircraft under the laws of any
jurisdiction other than the United States, and shall not cause the Aircraft to
be ineligible for such registration; provided, that the Lessee may, in
connection with any Sublease, and in accordance with and subject to ss. 6.03(b)
of the Participation Agreement, cause the Aircraft to be registered under the
laws of a foreign jurisdiction.
. The Lessee shall cause each Item to be maintained, inspected, serviced,
repaired, overhauled, and tested (1) in accordance with an FAA-approved program
or (if the Aircraft has been re-registered in accordance with ss. 6.03(b) of the
Participation Agreement) a program of another governmental authority having
jurisdiction (but in any event in accordance with maintenance standards at least
comparable to those required by the FAA or JAA ("Minimum Maintenance
Standards")), (2) so as to keep each Item in as good operating condition as it
was in when delivered to the Lessee by the Manufacturer, reasonable wear and
tear excepted, and so as to enable the airworthiness certificate for the
Aircraft to remain in good standing at all times, except when the FAA or (if the
Aircraft has been re-registered in accordance with ss. 6.03(b) of the
Participation Agreement) other applicable aeronautical authority grounds all
Canadair Regional Jet, 200 ER Series Aircraft, (3) in the same manner and with
the same care as used by the Lessee (or a Permitted Sublessee) with respect to
similar aircraft and engines owned or leased and operated by the Lessee (or such
Permitted Sublessee), and (4) so as to comply with the applicable regulations of
the FAA or (if the Aircraft has been re-registered in accordance with ss.
6.03(b) of the Participation Agreement) other governmental authority having
jurisdiction (but in any event in accordance with Minimum Maintenance
Standards), except during a good-faith contest of the validity, applicability,
or alleged violation of the pertinent rule or regulation in any reasonable
manner that does not involve any material risk of sale, forfeiture or loss of
the Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, and that does not involve any material risk of civil
liability or any risk of criminal liability against Lessor, the Indenture
Trustee or the Owner Participant and which does not extend beyond the end of the
Term if the pendency of such contest would adversely affect the Aircraft or the
remarketing thereof in any material respect; provided, that no contest shall
excuse the failure to maintain the airworthiness certification for the Aircraft
in good standing without the Lessor's written consent, nor shall the pendency of
any contest prevent a prohibition of use from becoming an Event of Loss. The
Lessee shall maintain all logs, manuals, certificates, data, and inspection,
modification, repair, and overhaul records required by the FAA (or any other
governmental body having jurisdiction) to be maintained in respect of each Item
(collectively, the "Manuals and Technical Records"), and such Manuals and
Technical Records shall be maintained in English (or be translated into English
on an ongoing basis) to the extent that they would need to be in English in
order to place the Aircraft on an FAA-approved maintenance program. Those
Manuals and Technical Records which are specific to the Aircraft (but not those
Manuals and Technical Records which are applicable to Canadair Regional Jet 200
ER series aircraft in general) shall, as between the Lessor and the Lessee and
all parties claiming through the Lessee, be the property of the Lessor but shall
become the property of the Lessee upon purchase by the Lessee of the Aircraft
pursuant to the terms of this Lease or upon the occurrence of an Event of Loss
and the Lessee's compliance with ss. 11(a)(1). The Lessee shall prepare for the
Lessor, and file, any reports required by any governmental authority as a result
of the Lessor's ownership of the Aircraft (and the Lessor shall furnish to the
Lessee and any Permitted Sublessee all reasonable co-operation in connection
therewith, at the Lessee's expense).
. The Lessee shall not cause or permit the Aircraft to be maintained, operated,
or used in violation of any law or any rule, regulation, treaty, statute, or
order of any government or governmental authority having jurisdiction, or in
violation of any airworthiness certificate, license, or registration relating to
the Aircraft issued by any such authority, except during a good-faith contest of
the validity, application, or alleged violation thereof in any reasonable manner
that does not involve any material risk of sale, forfeiture or loss of the
Aircraft or any Engine or the interests of the Indenture Trustee or the Owner
Participant therein (excluding any interests indemnified for under the Tax
Indemnity Agreement) and that does not involve any material risk of civil
liability or any risk of criminal liability against the Lessor, the Indenture
Trustee, or the Owner Participant, and which does not extend beyond the end of
the Term if the pendency of such contest would adversely affect the Aircraft or
the remarketing thereof in any material respect. If any such law, rule,
regulation, treaty, statute, order, certificate, license, or registration
requires alteration of the Aircraft, the Lessee shall obtain conformance
therewith at no expense to the Lessor and shall cause the Aircraft to be
maintained in proper operating condition thereunder. The Lessee and any
Sublessee shall have the right to operate the Aircraft or any Engine in any
geographical area; provided that neither the Lessee nor any Sublessee shall
operate the Aircraft or any Engine in any area excluded from coverage by any
insurance policy required by the terms of ss. 12, unless the Lessee or such
Sublessee has obtained, prior to such operation in such area, indemnification
from the Government, or other insurance, against the risks and in the amounts
required by ss. 12 covering such area or unless the Aircraft or Engine is only
temporarily located in such area as a result of an isolated occurrence
attributable to a hijacking, medical emergency, equipment malfunction, weather
conditions, navigational error or other similar unforeseen circumstances and the
Lessee or Sublessee is using good faith efforts to remove the Aircraft or Engine
from such area. Throughout the Term, as between the Lessee and the Lessor, the
possession, use, and maintenance of the Aircraft shall be at the risk and
expense of the Lessee. The Aircraft may not be operated, used, or located in any
declared war zone or in any area which is an area of recognized hostilities
(except to leave such a zone or area).
. Except as otherwise provided in ss. 11(e), the Lessee shall, at its own cost
and expense, promptly replace all Parts (other than Removable Improvements)
which become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair, or permanently rendered unfit for use for any reason whatsoever
(such substituted parts being "Replacement Parts"). In addition, in the ordinary
course of maintenance, overhaul, or testing, the Lessee may, at its own cost and
expense, remove any Parts, whether or not worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair, or permanently rendered unfit for
use, provided that such Parts (other than Removable Improvements) are promptly
replaced. All Replacement Parts (other than Removable Improvements) shall be
free and clear of all Liens (except for pooling arrangements to the extent
permitted by ss. 9(f) and other Permitted Liens) and shall be in good and
operable condition and capable of performing their intended purpose within
manufacturer's specifications. All Parts at any time removed from any Item shall
remain the property of the Lessor, no matter where located, until they have been
replaced by Replacement Parts which have been incorporated in such Item and
which meet the requirements for Replacement Parts specified above. Immediately
upon the incorporation of any Replacement Part (other than Removable
Improvements) in such Item as above provided, without further act, (1) title to
the removed Part shall vest in the Lessee, free and clear of all rights of the
Lessor, and such replaced Part shall no longer be a "Part" hereunder, (2) title
to such Replacement Part shall vest in the Lessor, subject only to a pooling
arrangement to the extent permitted by ss. 9(f), and (3) such Replacement Part
shall become subject to this Lease and shall be part of such Item to the same
extent as the removed Part. Notwithstanding the foregoing, the Lessee or any
Permitted Sublessee may remove, and not replace, up to $100,000 in aggregate
original cost (cumulative throughout the Term) of Parts that it reasonably deems
to be obsolete, the removal of which does not materially impair the value,
remaining useful life or utility of the Aircraft.
. The Lessee shall incorporate in the Aircraft any accessory, equipment, or
device, or make any improvement, modification, alteration, or addition thereto
(any such accessory, equipment, device, improvement, modification, alteration,
or addition being an "Improvement"), as is necessary from time to time to meet
the requirements of the FAA or any other governmental authority having
jurisdiction over the Aircraft. In addition, the Lessee may from time to time
install (or allow a Permitted Sublessee to install) any Improvement as the
Lessee (or any Permitted Sublessee) deems desirable in the proper conduct of its
business, provided that no such Improvement diminishes the value, utility, or
remaining useful life of any Item below the value, utility, and remaining useful
life that it would have had if that Improvement had not been made. Title to all
Improvements (other than Removable Improvements) shall, without further act,
vest in the Lessor.
Any Improvement that (1) is in addition to, and not in replacement of
or in substitution for, any Part originally incorporated in any Item or any
Replacement Part that replaced such an original Part, (2) is not required to be
incorporated in any Item pursuant to the first sentence of this ss. 9(e), and
(3) can be removed from such Item without impairing the value, utility, or
remaining useful life that such Item would have had at such time had such
Improvement not been made (a "Removable Improvement") shall not become an
accession to that Item or be subject to the Lien of the Indenture. At or before
the time that the Aircraft is returned to the Lessor, the Lessee may remove or
cause to be removed any Removable Improvement and shall repair or cause to be
repaired any damage to the Aircraft resulting from the installation or removal
of such Removable Improvement so as to restore the Aircraft to the value,
utility, and remaining useful life that it would have had at such time had such
Removable Improvement not been made, reasonable wear and tear excepted. Any
Removable Improvement not so removed before the time of return of the Aircraft
shall, at such time, become the property of the Lessor without further action by
the parties hereto.
If any Removable Improvement is owned by any third party or is subject
to a conditional sale contract or other security interest, then the Lessor
hereby agrees for the benefit of any such owner, conditional vendor, or secured
party that the Lessor will not acquire or claim, as against such owner,
conditional vendor, or secured party, any right, title, or interest in any such
Removable Improvement as the result of its installation on any Item; provided,
that the Lessor's agreement in this sentence shall be ineffective unless such
owner, conditional vendor, or secured party agrees in writing (a copy thereof to
be provided by the Lessee to the Lessor) and in a legally enforceable manner (a)
not to acquire or claim, as against the Lessor, any right, title, or interest in
any Item by reason of the installation of such Removable Improvement thereon,
and (b) promptly, after notice, to remove such Removable Improvement if the
Lessor declares this Lease to be in default.
. Any Part removed from any Item as provided in ss. 9(d) may be subjected to a
normal pooling arrangement customary in the airline industry entered into in the
ordinary course of the Lessee's or a Permitted Sublessee's business, provided
that (except for any removed Part that is a Removable Improvement) a Replacement
Part is incorporated in that Item in accordance with ss. 9(d) promptly after the
removal of the removed Part. In addition, any Replacement Part when incorporated
in an Item in accordance with ss. 9(d) may be owned by a Permitted Air Carrier
or a lessor to a Permitted Air Carrier subject to such a normal pooling
arrangement, provided that (unless the Replacement Part replaces a Removable
Improvement) the Lessee, promptly, either (1) causes title to such Replacement
Part to vest in the Lessor in accordance with ss. 9(d) by acquiring title
thereto for the benefit of, and transferring such title to, the Lessor free and
clear of all Liens (other than Permitted Liens), or (2) replaces such
Replacement Part by incorporating in that Item a further Replacement Part owned
by the Lessee free and clear of all Liens (other than Permitted Liens) and by
causing title to such further Replacement Part to vest in the Lessor in
accordance with ss. 9(d).
. The Lessee shall (1) cause each Item to be kept numbered with the
identification or serial numbers therefor as specified in the applicable Lease
Supplement, and (2) before locating the Airframe or any Engine outside the
United States, affix and maintain in such Airframe adjacent to and not less
prominent than the airworthiness certificate, or on such Engine in a prominent
location, a nameplate or stencil bearing the following legend:
This [Aircraft] [Engine] is subject to a security interest in
favor of The First National Bank of Maryland (as loan trustee)
and is leased from State Street Bank and Trust Company of
Connecticut, National Association (as owner trustee).
and such other markings as from time to time are required by law or otherwise
deemed necessary by the Lessor or the Indenture Trustee in order to protect the
Lessor's title to the Aircraft, the Lessor's rights under this Lease, and the
Indenture Trustee's rights with respect to the Aircraft. The Lessee shall
promptly replace any such required nameplate marking which has been removed,
defaced, or destroyed. Except as above provided, the Lessee will not allow the
name of any Person to be placed on any Item as a designation that might
reasonably be interpreted as a claim of ownership; provided, that nothing in
this ss. 9(g) shall prohibit the Lessee (or any Permitted Sublessee) from
placing appropriate lettering, painting, or markings (including its customary
colors and insignia, or those of any code-sharing affiliate) on any Item.
. At all reasonable times during the Term (but, except when a Specified Default
is then continuing, and except during the last six months of the Term, no more
than once per year for the Lessor and the Owner Participant and no more than
once per year for the Indenture Trustee), the Lessor, the Owner Participant and
the Indenture Trustee (or not more than two of their agents or authorized
representatives) may, upon not less than five days' prior written notice, at
their own cost and expense, inspect the Aircraft, the Airframe or any Engine and
the Lessee's books and records related thereto; provided, that, unless this
Lease has been declared to be in default in accordance with its terms, such
inspection shall be conducted so as not to interfere with the business of the
Lessee or the operation or maintenance by the Lessee (or a Permitted Sublessee)
of any aircraft and, as to any aircraft, shall be a visual, walk-around
inspection which may include going on board the aircraft, and shall not include
opening any panels, bays, or other apertures (but may include inspecting those
that are open); provided further, that the costs of inspection shall be borne by
the Lessee (and paid promptly upon demand) in the case of an inspection
conducted by such inspecting party after the occurrence of a Specified Default
which is then continuing. Promptly after the request of the Lessor, the Owner
Participant, or the Indenture Trustee, the Lessee or any Permitted Sublessee
shall provide the Lessee's or such Permitted Sublessee's schedule for upcoming
heavy maintenance checks and shall use commercially reasonable efforts to permit
such inspections by the Lessor, the Owner Participant or the Indenture Trustee
during such maintenance checks. Upon the request of the Lessor, the Owner
Participant, or the Indenture Trustee, the Lessee shall confirm the location of
any Item and shall, at any reasonable time, make any Item and all Manuals and
Technical Records relative thereto available to such requesting party (or its
agents or authorized representatives) for inspection and copying. The Lessor,
the Owner Participant and the Indenture Trustee shall have no duty to make any
such inspection nor shall the Lessor, the Owner Participant or the Indenture
Trustee incur any liability or obligation by reason of not making any such
inspection. Upon the request of the Lessor, the Lessee shall provide to the
Lessor, not more frequently than once per calendar month, a written report with
respect to the flight hours and cycles of operation of the Airframe and each
Engine during the period since the end of the period to which the most recent
such report related (or, if there has been no such previous report, since the
commencement of the Term) through the last day of the calendar month most
recently ended prior to the date of the current report.
. 11. Loss or Destruction; Requisition of Use
. If an Event of Loss occurs to the Airframe, the Lessee shall within 15 days
after such occurrence give to the Lessor and the Indenture Trustee written
notice of such Event of Loss and, within 60 days after such Event of Loss,
written notice of its election to perform one of the following two options (and
if the Lessee does not give the Lessor and the Indenture Trustee the notice of
such election within 60 days, the Lessee shall be deemed to have elected to
perform the option set forth in clause (2) of this ss. 11(a)):
(1) If this clause (1) is elected and no Event of Default
shall have occurred and then be continuing, the Lessee shall, within
180 days following such Event of Loss, convey or cause to be conveyed
to the Lessor, as replacement for the Airframe, good and marketable
title to an airframe of the same make and the same or a later model and
year of manufacture, having at least the value, utility, and remaining
useful life, and being in as good an operating condition, as the
Airframe subject to such Event of Loss (assuming that the Airframe had
been maintained and was in the condition required in accordance with
the terms of this Lease so as to enable the airworthiness certificate
for the Aircraft to remain in good standing) and otherwise meeting the
requirements set forth below (a "Replacement Airframe"), good and
marketable title to the same number of Replacement Engines as the
Engines, if any, installed on the Airframe when such Event of Loss
occurred, such Replacement Airframe and any such Replacement Engine(s)
to be free and clear of all Liens (other than Permitted Liens). In such
case, the Lessee shall promptly, at its expense: (aa) furnish the
Lessor with bills of sale, in form and substance reasonably
satisfactory to the Lessor, with respect to such Replacement Airframe
and any such Replacement Engine(s), (bb) cause such Replacement
Airframe to be duly registered in the Lessor's name at the FAA (or such
foreign jurisdiction as is permitted by ss. 9(a)), (cc) cause
amendments and/or supplements hereto and to the Indenture (subjecting
such Replacement Airframe and any such Replacement Engines to the Lien
of the Indenture), in form and substance reasonably satisfactory to the
Lessor and the Indenture Trustee, with respect to such Replacement
Airframe and any such Replacement Engine(s) to be duly executed by the
appropriate parties and recorded at the FAA (or such foreign
jurisdiction), (dd) furnish the Lessor and the Indenture Trustee with
evidence reasonably satisfactory to each of them of the value, utility,
and remaining useful life of, and good title to, such Replacement
Airframe and any such Replacement Engine(s) (including an appraisal by
a qualified independent appraiser reasonably satisfactory to the Owner
Participant certifying that such Replacement Airframe has a value,
utility and remaining useful life at least equal to, and is in as good
operating condition as, the Airframe replaced, assuming such Airframe
was in the condition required by the terms of this Lease immediately
prior to the occurrence of such Event of Loss and that any such
Replacement Engine satisfies the requirements for a "Replacement
Engine" as set forth in the definition thereof in Schedule I hereto, an
opinion of counsel addressed to the Lessor and the Indenture Trustee
that such Replacement Airframe and Replacement Engine(s) shall be
subject to the Lien of the Indenture, and an opinion of counsel expert
in FAA (or such foreign jurisdiction) matters as to the absence of all
Liens of record), (ee) furnish the Lessor and the Indenture Trustee
with evidence of compliance with the insurance provisions of ss. 12
with respect to such Replacement Airframe and any such Replacement
Engine(s) as such party may reasonably request, (ff) assign to the
Lessor the benefit of all assignable manufacturer's and vendor's
warranties with respect to such Replacement Airframe and any such
Replacement Engines, (gg) furnish the Lessor and the Indenture Trustee
with a certificate of the Lessee certifying compliance with this ss.
11(a)(1) and to the effect that, upon consummation of such replacement,
no Event of Default will exist, (hh) furnish the Lessor and the
Indenture Trustee with an opinion of counsel reasonably acceptable to
such party to the effect that, upon such conveyance, the Lessor's title
to such Replacement Airframe and any such Replacement Engines will be
free and clear of all Liens of record at the FAA (or such foreign
jurisdiction) and that such Replacement Airframe and any such
Replacement Engines will be leased hereunder and be subject to the Lien
of the Indenture to the same extent as the Aircraft replaced thereby,
(ii) furnish the Lessor with all documents, certificates, and other
opinions necessary to enable the Lessor to comply with the requirements
of ss. 9.08 of the Indenture, and (jj) take such other action as the
Lessor or the Indenture Trustee reasonably requests in order that such
Replacement Airframe and any such Replacement Engine(s) be properly
titled in the Lessor free and clear of all Liens (except Permitted
Liens), leased hereunder, and subjected to the Lien of the Indenture to
the same extent as the Airframe and any Engine(s) replaced thereby.
Upon compliance by the Lessee with this ss. 11(a) (1), the Lessor shall
transfer to the Lessee or its designee (subject to any insurer's
salvage rights), "as is, where is", without recourse or warranty,
express or implied (except as to the absence of Lessor's Liens), all
right, title, and interest conveyed to the Lessor in and to the
Airframe and any Engine(s) with respect to which such Event of Loss
occurred, together with any insurance proceeds relating to property
damage, if any. In connection with such transfer, the Lessee shall
prepare and the Lessor shall execute, all in recordable form, a ▇▇▇▇ of
sale evidencing such transfer, a release of the Airframe and any
Engine(s) to which such Event of Loss occurred, and such other
documents as the Lessee reasonably requests (all at the expense of the
Lessee). Any Engine not installed on the Airframe when such Event of
Loss occurred shall continue to be the property of the Lessor and
leased hereunder as part of the Aircraft. Upon such replacement, each
such Replacement Airframe and Replacement Engine shall be deemed part
of the property leased hereunder; the Replacement Airframe shall be an
"Airframe" and each such Replacement Engine shall be an "Engine" as
defined herein; and each such Replacement Airframe and Replacement
Engine shall be deemed part of the Aircraft. An Event of Loss covered
by this ss. 11(a)(1) shall not result in any change in Basic Rent,
Stipulated Loss Value, Termination Value, Renewal Rent and EBO Price.
The Lessee shall be responsible for any sales taxes or similar transfer
taxes resulting from such replacement.
(2) If the Lessee does not elect (or is deemed to have not
elected) to perform clause (1) of this ss. 11(a), or if the Lessee
fails to perform its obligations under clause (1) of this ss. 11(a),
the Lessee shall pay or cause to be paid to the Lessor an amount equal
to (v) the Stipulated Loss Value of the Aircraft, determined as of the
applicable date determined in accordance with the following sentence if
such date is a Stipulated Loss Value Date or, if such date is not a
Stipulated Loss Value Date, determined as of the following Stipulated
Loss Value Date (the date as of which Stipulated Loss Value is
determined as provided herein being referred to as the "SLV
Determination Date"), plus (w) all unpaid Basic Rent (and, if
applicable, Renewal Rent) due prior to the SLV Determination Date, less
(x) if such SLV Determination Date is not a Rent Payment Date, the pro
rata portion of Basic Rent (or, if applicable, Renewal Rent) paid in
advance on the most recent Rent Payment Date in respect of the period
commencing on the Loss Payment Date (as defined below) and ending on
the next Rent Payment Date, plus (y) that portion of Basic Rent (or, if
applicable, Renewal Rent) payable in arrears on such SLV Determination
Date, or, if such SLV Determination Date is not a Rent Payment Date,
the pro rata portion of the Basic Rent (or, if applicable, Renewal
Rent) payable in arrears on the following Rent Payment Date in respect
of the period commencing on the Rent Payment Date immediately preceding
the SLV Determination Date and ending on such SLV Determination Date,
plus (z) all other amounts of Supplemental Rent due on or before the
Loss Payment Date and any reasonable expenses and costs incurred in
connection with such Event of Loss by the Lessor, the Owner Participant
or the Indenture Trustee (including with respect to the related
prepayment of the Certificates). Such amount shall be paid (including
by application of proceeds from insurance carried under ss. 12(b)) on
the earlier of (x) the date within 180 days after the Event of Loss as
designated by the Lessee, and (y) three Business Days following receipt
of all proceeds (or, if earlier, proceeds in an amount at least equal
to Stipulated Loss Value) of the insurance carried under ss. 12(b)
(provided, that if the Lessee has not yet determined whether to elect
to perform the replacement option described in clause (1) of this ss.
11(a), then this clause (y) shall not require payment earlier than the
Business Day after the Lessee makes (or is deemed to have made) an
election of clause (2) of this ss. 11(a)) (the applicable date on which
Stipulated Loss Value is paid being referred to herein as the "Loss
Payment Date"). Upon payment in full of such Stipulated Loss Value and
all such other amounts, (aa) the Lessee's obligation to pay all
succeeding installments of Basic Rent, and the Term, shall terminate,
and (bb) the Lessor shall transfer to the Lessee or its designee
(subject to any insurer's salvage rights) "as is, where is", without
recourse or warranty, express or implied (except as to the absence of
Lessor's Liens), all right, title, and interest conveyed to the Lessor
in and to the Aircraft (and in connection with such transfer, the
Lessee shall prepare and the Lessor shall execute, all in recordable
form, a ▇▇▇▇ of sale evidencing such transfer, and a termination of
this Lease, and the Lessee shall prepare and the Indenture Trustee
shall execute, in recordable form, an Indenture release, all at the
Lessee's expense). The Lessee shall be responsible for any sales taxes
or similar transfer taxes resulting from such transfer.
. If an Event of Loss occurs to any Engine under circumstances in which no Event
of Loss occurs to the Airframe, the Lessee shall notify the Lessor and the
Indenture Trustee thereof within 30 days of obtaining knowledge thereof and
shall, within 90 days after the date of occurrence of such Event of Loss, duly
convey to the Lessor, as replacement for such Engine, title to a Replacement
Engine, free and clear of all Liens (other than Permitted Liens). At the time of
any such conveyance, the Lessee shall, at its expense: (1) furnish the Lessor
with a ▇▇▇▇ of sale, in form and substance reasonably satisfactory to the
Lessor, for such Replacement Engine, (2) cause supplements hereto and to the
Indenture (subjecting such Replacement Engine(s) to the Lien of the Indenture),
in form and substance reasonably satisfactory to the Lessor, for such
Replacement Engine to be duly executed by the appropriate parties and recorded
at the FAA or as appropriate under the laws of the country of registry for the
Aircraft, (3) execute and, if necessary, file such documents as the Lessor
reasonably requests to confirm the Lessor's ownership of, and title, to such
Replacement Engine, (4) furnish the Lessor and the Indenture Trustee with such
evidence of compliance with the insurance provisions of ss. 12 for such
Replacement Engine as such party reasonably requests, (5) assign to the Lessor
the benefit of all assignable manufacturer's and vendor's warranties with
respect to such Replacement Engine(s), (6) furnish the Lessor with all
documents, certificates, and opinions necessary to enable the Lessor to comply
with the requirements of ss. 9.08 of the Indenture, (7) upon request, furnish
the Lessor and the Indenture Trustee with an opinion of counsel reasonably
acceptable to each such party to the effect that, upon such conveyance, the
Lessor's title to such Replacement Engine will be free and clear of all Liens of
record at the FAA or in the country of registry for the Aircraft and that such
engine will be leased hereunder and be subject to the Lien of the Indenture to
the same extent as the Engine replaced thereby, (8) furnish the Lessor with a
certificate of the Lessee or any Permitted Sublessee certifying that such
Replacement Engine has a value, utility, and remaining useful life at least
equal to, and is in as good operating condition as, the Engine so replaced (in
each case without regard to the number of hours or cycles remaining until the
next scheduled maintenance visit, and assuming that such Engine was in the
condition and repair required by the terms hereof immediately before such Event
of Loss), (9) furnish the Lessor with a certificate of an aircraft advisor
reasonably satisfactory to the Owner Participant (who must be a nationally
recognized aircraft authority) certifying that such Replacement Engine satisfies
the requirements for a "Replacement Engine" as set forth in the definition
thereof in Schedule I hereto, (10) furnish the Lessor and the Indenture Trustee
with a certificate of the Lessee or any Permitted Sublessee certifying as to
compliance with this ss. 11(b), and (11) take such other action as the Lessor or
the Indenture Trustee reasonably requests in order that such Replacement Engine
be properly titled in the Lessor free and clear of all Liens (except Permitted
Liens), leased hereunder, and subjected to the Lien of the Indenture to the same
extent as the Engine replaced thereby.
Upon compliance by the Lessee with the terms of this ss. 11(b), (x) the
Lessor shall transfer to the Lessee or its designee (subject to any insurer's
salvage rights), "as is, where is", without recourse or warranty, express or
implied (except as to the absence of Lessor's Liens), all right, title, and
interest conveyed to the Lessor in and to the Engine to which such Event of Loss
occurred, together with any insurance proceeds relating to property damage, if
any, and (y) the Lessor and the Indenture Trustee shall (at the Lessee's
expense) release such replaced Engine from this Lease and the Indenture. Each
such Replacement Engine shall, upon such conveyance, be deemed part of the
property leased hereunder, shall be deemed an "Engine" and shall be deemed part
of the Aircraft. No Event of Loss to an Engine under the circumstances
contemplated by the terms of this ss. 11(b) shall result in any reduction in
Basic Rent. The Lessee shall be responsible for any sales taxes or similar
transfer taxes resulting from any such replacement.
. The Lessee hereby assumes and agrees to bear the risk of loss to each Item
and, except as provided in ss. 11(a) and ss. 11(b), shall not be released from
its obligations hereunder in the event of any damage to the Aircraft or any part
thereof or any Event of Loss relating thereto.
. A requisition of use which does not constitute an Event of Loss shall not
terminate this Lease, and each and every obligation of the Lessee with respect
thereto shall remain in force to the same extent as if such requisition had not
occurred, except to the extent that any failure or delay in the performance of
such obligations (other than any obligations for the payment of money) are
prevented or delayed by such requisition of use. The Lessee shall be entitled to
all sums, attributable to the period the Item(s) involved is/are subject to this
Lease, received by reason of any such requisition of use. All payments received
for the use of any Item after the Term shall be paid over to, or retained by,
the Lessor in the same manner as Rent under ss. 3(f) (or paid over to or
retained by the Lessee if it purchases the Aircraft in accordance with the
provisions hereof). The Lessee shall promptly notify the Lessor of any such
requisition.
. Any payments received at any time by the Indenture Trustee, the Lessor, or the
Lessee from any insurer under insurance (other than liability insurance and
other than insurance carried by the Lessee (or any Permitted Sublessee) in
excess of the insurance required to be maintained by the Lessee pursuant to ss.
12(b) or insurance maintained by the Lessor, the Owner Participant or the
Indenture Trustee at its own expense) maintained hereunder or from any
governmental authority or other Person with respect to an Event of Loss will be
applied as follows:
(1) if such payments are received as a result of an Event of
Loss to the Airframe (and any Engine then installed thereon), and the
Lessee does not make a replacement pursuant to ss. 11(a)(1), (aa) so
much of such payments as shall not exceed the Stipulated Loss Value for
the Aircraft shall be applied in reduction of the Lessee's obligation
to pay such Stipulated Loss Value if not already paid, or, if already
paid, shall be applied by the Lessor (or its assignee) to reimburse the
Lessee or its designee for the payment of such Stipulated Loss Value,
and (bb) the balance, if any, of such payments remaining thereafter
shall be paid over to, or retained by, the Lessee;
(2) if such payments are received as the result of an Event of
Loss to the Airframe, and the Lessee has made or is making a
replacement thereof pursuant to ss. 11(a)(1), such payments shall be
paid over to, or retained by, the Lessor in the same manner as Rent
under ss. 3(f), until the Lessee fully performs the terms of ss.
11(a)(1), after which such payments shall be paid over to, or retained
by, the Lessee; and
(3) if such payments are received as the result of an Event of
Loss to an Engine under the circumstances contemplated by ss. 11(b),
such payments shall be paid over to, or retained by, the Lessor in the
same manner as Rent under ss. 3(f), until the Lessee fully performs the
terms of ss. 11(b) with respect to that Event of Loss, after which such
payments shall be paid over to, or retained by, the Lessee.
If (x) the Lessor and the Indenture Trustee have received notice from
the Lessee pursuant to ss. 11(a) that, in connection with an Event of Loss, the
Lessee elects to replace the Airframe, or (y) an Event of Loss occurs to an
Engine under the circumstances contemplated by ss. 11(b), or (z) the Lessor or
the Indenture Trustee receives any proceeds of insurance maintained under ss.
12(b) pending completion of repairs to an Item, then each of the Lessor and the
Indenture Trustee shall use its reasonable efforts to invest, at the Lessee's
written request, direction, and risk, any payments that it receives with respect
to such Item from any insurer under insurance required to be maintained
hereunder or from the Lessee or any Permitted Sublessee or from any governmental
authority or other party. Any such investments shall be in obligations of the
type described in clause (a) of the definition of Permitted Investments, except
to the extent that another Permitted Investment is selected in writing by the
Lessee. All profits and losses on such investments and any taxes in respect
thereof shall be for the account of the Lessee. In order to make the payments to
the Lessee provided for in clauses (2) and (3) of this ss. 11(e) or in ss.
12(c), the Lessor and the Indenture Trustee are authorized to sell any
obligations so purchased and shall not be required to make such payments to the
Lessee until the Lessor or the Indenture Trustee (as the case may be) has had a
reasonable time to sell such obligations and to obtain the sale proceeds.
. Any amount referred to in this ss. 11 or in ss. 12(b) or (f) which is
otherwise payable to the Lessee shall not be paid to the Lessee if a Specified
Default exists at the time of payment, but shall be paid to and held by the
Lessor as security for the Lessee's obligations hereunder, and at such time as
no Specified Default exists, such amount shall be paid to the Lessee.
. 12. Insurance
. The Lessee shall maintain in effect, at all times during the Term,
comprehensive aircraft and general liability insurance (including passenger
legal liability insurance and property damage insurance (excluding
manufacturer's product liability insurance)) with respect to the Aircraft (1) in
amounts which are not less than the comprehensive aircraft and general liability
and property damage insurance applicable from time to time to similar aircraft
and engines which then comprise the Lessee's (or a Sublessee's) fleet on which
the Lessee (or such Sublessee) carries insurance, but in no event less than
$200,000,000 combined single limit per occurrence, (2) of the types and which
cover risks of the kind customarily insured against by the Lessee with respect
to similar aircraft and engines which it operates, and (3) maintained with
independent insurers of favorably-recognized responsibility (or, as to a foreign
Sublessee, recognized as responsible in the world aviation community). The
insurance required by this ss. 12(a) may be subject to self-insurance on a per
occurrence or fleet-wide basis, by way of deductible or premium adjustment
provisions in insurance policies or otherwise, in any amounts not to exceed the
greater of 5% of the net worth of ACA Inc. (based on the most-recent quarterly
financial statements of ACA Inc.) and $1,000,000.
During any period that the Aircraft is grounded and not in operation
for any reason, the Lessee may modify the insurance required by this ss. 12(a)
(i) to reduce the amounts of public liability and property damage insurance and
(ii) to modify the scope of the risks covered and the type of insurance, in both
circumstances to conform to such insurance customary in the United States
airlines industry for regional air carriers similarly situated with the Lessee
in respect of similar aircraft which are grounded, not in operation, and stored
or hangared, except that the amounts of coverage and scope of risk covered and
the type of insurance shall be the same as from time to time applicable to
aircraft owned or leased by Lessee on the ground, not in operation, and stored
or hangared.
. The Lessee shall maintain or cause a Permitted Sublessee to maintain in
effect, at all times during the Term (including any period during which the
Aircraft is grounded for any reason), with insurers of favorably-recognized
responsibility (or, as to a foreign Sublessee, recognized as responsible in the
world aviation community), all-risk ground and flight aircraft hull insurance
covering the Airframe and all-risk coverage for Engines and Parts while not
incorporated in the Airframe or an Engine, in an amount which, when paid
hereunder for an Event of Loss to the Airframe and any Engine(s) and engine(s)
then installed thereon, will be not less than the Stipulated Loss Value for the
Aircraft (computed for the following Payment Date); provided that neither the
Lessee nor any Permitted Sublessee shall be required to maintain all-risk flight
aircraft hull insurance with respect to any period in which the Aircraft is
grounded for any reason and properly stored or hangared. The Lessee may
self-insure, by way of deductible or premium adjustment provisions in insurance
policies or otherwise, the risks required to be insured against under this ss.
12(b), in any amounts not to exceed the greater of (x) $1,000,000, or (y) 5% of
the net worth of ACA Inc. (based on the most-recent quarterly financial
statements of ACA Inc.) (or, in either case, such higher amount as may be
approved by the Owner Participant). The Lessee shall maintain war risk insurance
(including political hijacking and governmental confiscation insurance) or
obtain indemnification from the Government with respect to the Aircraft only if
and to the extent that the Aircraft is operated in a war zone or area of
recognized hostilities.
. Any policies of insurance carried in accordance with this ss. 12: (1) shall
include the Additional Insureds as their interests appear as additional
insureds, (2) with respect to insurance carried in accordance with ss. 12(b),
shall be payable to the Indenture Trustee so long as the Lien of the Indenture
shall not have been discharged, and thereafter to the Lessor, and, if no
Specified Default exists, shall be disbursed to the Lessee (or other appropriate
Person specified by the Lessee) upon completion of repairs made to the Aircraft
so as to restore it to the operating condition required by ss. 9 or shall be
disbursed as otherwise required by this Lease; provided, that unless the Lessor
or the Indenture Trustee has notified the insurers that a Specified Default
exists, insurance proceeds not exceeding $3,000,000 for any single occurrence
and not involving an Event of Loss to the Aircraft may be payable directly to
the Lessee or any Permitted Sublessee, (3) shall provide that if the insurers
cancel such insurance for any reason whatever, or any change adverse to any
Additional Insured is made in policy terms or provisions, or the insurance is
allowed to lapse for nonpayment of premium or such insurance coverage is
reduced, such cancellation, change, lapse, or reduction shall not be effective
as to any Additional Insured for 30 days (seven days, or such other period as is
then customary in the airline insurance industry, in the case of any war risk
coverage) after such Additional Insured receives written notice of such
cancellation, change, lapse, or reduction, (4) shall provide that, in respect of
the interest of each Additional Insured in such policies, the insurance shall
not be invalidated by any action or inaction of the Lessee, any Sublessee, or
any other Person except such Additional Insured, (5) shall provide that the
insurers waive any rights of subrogation against the Additional Insureds, except
to the extent of any loss caused by the gross negligence or willful misconduct
of an Additional Insured, (6) shall provide that the Additional Insureds shall
have no obligation or liability for payment of any premiums, commissions, calls,
or assessments, and (7) shall provide that all proceeds in excess of $3,000,000
shall be paid to the Indenture Trustee so long as the Lien of the Indenture
shall not have been discharged, and thereafter to the Lessor, unless the insurer
has received notice that a Specified Default exists, in which case all proceeds
shall be paid to the Indenture Trustee so long as the Lien of the Indenture
shall not have been discharged, and thereafter to the Lessor. Each liability
policy (x) shall be primary without right of contribution from any other
insurance which is carried by the Additional Insureds, (y) shall expressly
provide that all of the provisions thereof, except the limits of liability,
shall operate in the same manner as if there were a separate policy covering
each insured, and (z) shall provide that the insurers waive any right of setoff,
counterclaim, or other deduction against the Additional Insureds. In connection
with any insurance proceeds payable to the Additional Insureds for the repair of
any Item, the Additional Insureds shall respond as soon as possible to requests
of the Lessee to turn over such funds for the repair of such Item. With respect
to any Item, any amount received by an Additional Insured pursuant to insurance
carried under ss. 12 which exceeds such Item's Stipulated Loss Value on the date
such payment is received shall be promptly remitted to the Lessee or its
designee.
. At least once each year during the Term, the Lessee shall furnish to the
Additional Insureds a report signed by an independent broker certifying that
policies of insurance in the forms, covering the risks, and in the amounts
required by this ss. 12 are in full force and effect and that, in the opinion of
such broker, the insurance then carried and maintained in respect of the
Aircraft complies with the terms of this ss. 12, and including (i) confirmation
that the insurance has been placed with insurers, giving the name of each
insurer, the amount for which it insures (and any portion thereof which is
subject to a deductible), and the period of the policy, and (ii) confirmation
that all premiums due to the insurers have been paid. The Lessee (or any
Sublessee) shall instruct such firm to notify the Additional Insureds in writing
promptly of any defaults in the payment of any premium and of any other act or
omission on the part of the Lessee or any Sublessee or of any event of which
such broker has knowledge which might invalidate or render unenforceable, in
whole or in part, any insurance for the Airframe or any Engine.
. If the Lessee fails to cause insurance to be maintained as required by this
ss. 12, any Additional Insured may, after giving reasonable advance notice to
the Lessee of such Additional Insured's intent to do so, provide such insurance
and, in such event, the Lessee shall, upon demand, reimburse such Additional
Insured, as Supplemental Rent, for the cost thereof, without waiver of any other
rights such Additional Insured may have. Nothing in this Lease shall prohibit
the Lessor, the Owner Participant or the Indenture Trustee from insuring the
Airframe or any Engine, or its interest therein at its own expense in an amount
in excess of that required to be maintained hereunder, provided that such excess
insurance in no way increases the cost or limits the availability of any
insurance required to be maintained hereunder; provided further, that any
insurance policies of the Lessor, the Owner Participant or the Indenture Trustee
insuring the Airframe or any Engine shall provide for a release to the Lessee of
any and all salvage rights in and to the Airframe or any Engine.
. The Lessor (and the other Additional Insureds) shall accept, in lieu of
insurance against any risk with respect to any Item, indemnification from the
United States government against such risk in any amount which, when added to
the amount of any insurance against such risk maintained by or for the benefit
of the Lessee (including permitted deductibles and self-insurance) with respect
to any Item, shall be to the combined effect substantially the same as to amount
and risk (and in favor of the same parties) as insurance otherwise required by
this ss. 12.
. 13. Subleasing; Possession
. The Lessee shall not, without the Lessor's prior written consent, sublease, or
sublet or otherwise relinquish possession of the Aircraft, the Airframe or any
Engine, or permit any Engine to be installed on any airframe other than the
Airframe; provided that if no Specified Default shall have occurred and be
continuing at the time of commencement of such sublease or subletting or at the
time of such relinquishment of possession or such installation, the Lessee (and,
except as otherwise provided in this ss. 13(a) as to clause (6), any Sublessee)
may, without the Lessor's prior written consent:
(1) subject any Engine to normal interchange or pooling
arrangements customary in the airline industry and entered into in the
ordinary course of its business (and with any Permitted Air Carrier, in
the case of interchange arrangements), provided that no transfer of the
title of such Engine is required in connection therewith (but if the
Lessor's title to any such Engine is divested under any such
arrangement, such divestiture shall be deemed to be an Event of Loss to
such Engine and the Lessee shall comply with ss. 11(b) in respect of
such deemed Event of Loss);
(2) deliver possession of any Item to any qualified
organization for testing, maintenance, or overhaul work or for
Improvements to the extent required or permitted by ss. 9(e);
(3) install any Engine on an airframe owned by the Lessee (or
such Sublessee) free and clear of all Liens, except (aa) Permitted
Liens, (bb) Liens that do not apply to such Engine, (cc) the Lien of
any agreement which effectively provides that such Engine shall not
become subject to the Lien thereof, notwithstanding the installation of
such Engine on any airframe subject to the Lien of such agreement,
unless and until the Lessee (or such Sublessee) becomes the owner of
such Engine, and (dd) those created by the rights of other air carriers
under normal interchange or pooling agreements which are customary in
the airline industry and do not require the transfer of title to such
Engine;
(4) install any Engine on an airframe leased to the Lessee (or
such Sublessee) or owned by the Lessee (or such Sublessee) subject to a
conditional sale or other security agreement, so long as such Engine
does not become subject to a Lien (other than a Permitted Lien);
(5) install any Engine on an airframe owned by the Lessee (or
such Sublessee), leased to the Lessee (or such Sublessee), or owned by
the Lessee (or such Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither clause (3) nor
clause (4) above applies (but if the Lessor's title to such Engine is
divested in connection with such installation, such divestiture shall
be deemed an Event of Loss to such Engine and the Lessee shall comply
with ss. 11(b) in respect of such deemed Event of Loss, the Lessor not
intending hereby to waive any right or interest it may have to or in
such Engine under applicable law until compliance by the Lessee with
such ss. 11(b));
(6) sublease any Item to any Permitted Sublessee; and
(7) subject any Item to (a) contracts with the United States
of America or any instrumentality or agency thereof, (b) wet leases
with third parties under which the Lessee has effective control of the
Aircraft in the ordinary course of the Lessee's business which shall
not be considered a transfer of possession hereunder, provided that the
Lessee's obligations under this Lease shall continue in full force and
effect notwithstanding any such wet lease, or (c) the CRAF Program;
provided, further, that (aa) the rights of any transferee shall be effectively
subject and subordinate (and, in the case of a sublease, shall be made expressly
subject and subordinate) to all the terms of this Lease including the Lessor's
right to repossession pursuant to ss. 15 and to avoid such sublease upon such
repossession, (bb) the Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as if such
transfer had not occurred, (cc) any such Sublease shall be for a period or
periods not to exceed the Term unless the Lessee has notified the Lessor of its
exercise of the purchase option pursuant to ss. 16, and (dd) no Sublessee may
sub-sublease any Item, except that a Permitted Sublessee who is an airframe or
engine manufacturer, or Affiliate thereof, may sub-sublease to any Permitted
Sublessee to whom a sublease would be permitted under this ss. 13(a). Any such
Sublease will require maintenance, use, and operation standards in accordance
with this Lease. The Lessee shall notify the Lessor and the Indenture Trustee of
any sublease promptly after entering into it, and shall provide the Lessor and
the Indenture Trustee with a copy of such Sublease. No relinquishment of
possession of any Item or Part shall in any way discharge or diminish any of the
Lessee's obligations.
As security for the Lessee's due and punctual payment of all Rent and
performance of all of its other covenants and obligations in the Operative
Documents, the Lessee hereby grants to the Lessor a security interest in all of
the Lessee's right, title, and interest in and to each Sublease, and all
payments, including payments of rent, insurance proceeds (other than public
liability insurance proceeds), and other amounts due or to become due
thereunder. The Lessee shall enter into a "Sublease Assignment" with respect to
each Sublease of the Airframe having a term of one year or longer. The Lessee
hereby (1) acknowledges and consents to the Lessor's assignment of all the
Lessor's right, title, and interest in and to the Lessee's right, title, and
interest in and to each Sublease, and all payments, including rent, insurance
proceeds (other than public liability insurance proceeds), and other amounts due
or to become due thereunder (excluding Excepted Payments), to the Indenture
Trustee under and pursuant to the Indenture, and (2) acknowledges that so long
as the Lien of the Indenture has not been discharged, all the Lessor's rights in
respect of such Sublease shall be exercisable as set forth in the Indenture. In
furtherance of the provisions of this paragraph, the Lessee agrees that each
Sublease for more than one year of the Airframe (x) shall contain a provision
substantially to the effect that the Sublessee agrees to pay all amounts due
under the Sublease to the Indenture Trustee (or to the Owner Trustee after the
Lien of the Indenture is discharged) after the Sublessee receives written notice
from the Indenture Trustee or the Owner Trustee to such effect (until the
Sublessee receives written notice from the Indenture Trustee to contrary effect)
and stating that a Specified Default exists under the Lease, and (y) shall be
accompanied by such Uniform Commercial Code financing statements as shall, in
the Lessor's reasonable opinion, be required to perfect and protect the security
interests of the Lessor and the Indenture Trustee in such Sublease.
. The Lessor hereby agrees for the benefit of each lessor or secured party of
any engine leased to the Lessee or owned by the Lessee subject to a conditional
sale or other security agreement that the Lessor shall not acquire or claim, as
against such lessor or secured party, any right, title, or interest in any
engine as the result of the installation of such engine on the Airframe at any
time while such engine is subject to such lease or conditional sale or other
security agreement and owned by such lessor or subject to a security interest in
favor of such secured party.
(d) Civil Reserve Air Fleet Program. The other provisions of this Lease
to the contrary notwithstanding, the Lessee may transfer possession of the
Aircraft or any Engine to the United States of America or any other
instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program
("CRAF Program") for a period not to extend beyond the end of the Term;
provided, that if, at any time during the Term, the Aircraft is called into
service by the Government pursuant to the CRAF Program and is not returned or
released by the Government on or before the last scheduled day of the Term, the
Term shall be extended automatically for up to an additional six months
thereafter. The Lessee will promptly notify the Lessor in writing in the event
of the requisition for use of the Aircraft under CRAF Program activation by the
Government ("Civil Reserve Air Fleet Requisition"). All of the Lessee's
obligations under this Lease will continue to the same extent as if such
requisition had not occurred. If there is a requisition for use of the Aircraft
pursuant to the CRAF Program or CRAF Program activation, there may be
substituted for all or any part of the insurance required by ss. 12 insurance
provided under 49 U.S.C. ss. 44301 et seq. or Government indemnification;
provided, that the Lessee will remain responsible for full compliance with all
the provisions of this Lease whether or not Government insurance or Government
indemnification satisfies the Lessee's obligations under this Lease. If there is
a requisition for use of the Aircraft pursuant to the CRAF Program or CRAF
Program activation, there will be no limitation on the geographic area in which
the Aircraft may be operated. The Lessee hereby assigns to the Lessor all rights
to payment for the Aircraft by the Government under the CRAF Program to secure
all the Lessee's obligations to pay Rent and to perform its other obligations
under the Operative Agreements. At such time as the Lessor is paid in full for
all amounts it is due and owed by the Lessee, the aforesaid assignment shall
terminate without further act of the parties and all such amounts owed by the
Government under the CRAF Program to the Lessee but paid to the Lessor, which
the Lessor has not previously applied to compensate itself for amounts due
hereunder from the Lessee, shall be paid to the Lessee.
. Each of the following shall constitute an "Event of Default" (whether any 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 administrative or
governmental body) so long as it has not been remedied:
(a) Basic Rent. The Lessee fails to make any payment of Basic Rent,
Renewal Rent, Stipulated Loss Value or Termination Value or a payment of
Supplemental Rent constituting any Make-Whole Premium payable with respect to
any Certificate under the terms of the Indenture when due and such failure
continues for five Business Days after the due date.
(b) Other Supplemental Rent. The Lessee fails to make any other payment
of Supplemental Rent (other than Stipulated Loss Value, Termination Value or any
Make-Whole Premium payable with respect to any Certificate under the terms of
the Indenture) when due and such failure continues for ten Business Days after
the Lessee receives written notice thereof (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall constitute
an Event of Default at the discretion of the Owner Participant).
(c) Insurance. The Lessee fails to cause insurance to be maintained in
accordance with ss. 12.
(d) Covenants. The Lessee or ACA Inc. fails to perform or observe any
of the other covenants to be performed or observed by it hereunder or under any
Operative Agreement and such failure continues for at least 30 days after the
Lessee receives written notice thereof, unless such failure cannot be remedied
with diligent effort during such 30-day period and the Lessee (i) determines in
good faith that such failure may be remedied with additional efforts and (ii) is
diligently proceeding by appropriate proceedings to correct such failure, in
which case such failure continues for such longer period (not exceeding 180 days
from the date of notice) as may be necessary to remedy such failure with
diligent effort of the Lessee.
(e) Representations. Any representation or warranty of the Lessee or
ACA Inc. in any Operative Agreement (excluding those in the Tax Indemnity
Agreement) is incorrect in a material respect when made, remains material when
discovered, and, if the effect of such misrepresentation is curable, is not
cured within 30 days after the Lessee's receipt of written notice from the
Lessor.
(f) Appointment of Receiver, etc. The Lessee or ACA Inc. consents to
the appointment of a receiver, trustee, or liquidator of itself or substantially
all of its property, shall generally not pay its debts as they come due, admits
in writing its inability to pay its debts generally as they come due, or makes a
general assignment for the benefit of creditors.
(g) Voluntary Bankruptcy. The Lessee or ACA, Inc. (1) files a voluntary
petition in bankruptcy or a voluntary petition or an answer seeking
reorganization, liquidation or other relief in a proceeding under any bankruptcy
laws or other insolvency laws, as now or hereafter in effect, or an answer
admitting the material allegations of a petition filed against the Lessee or
ACA, Inc. in any such proceeding, or (2) by voluntary petition, answer, or
consent, the Lessee or ACA Inc. seeks relief under the provisions of any other
existing or future bankruptcy or other similar law providing for the
reorganization or winding-up of corporations or providing for an agreement,
composition, extension, or adjustment with its creditors.
(h) Involuntary Appointment. An order, judgment, or decree is entered
in any proceeding by any court of competent jurisdiction appointing, without the
Lessee's or ACA Inc.'s consent, a receiver, trustee, or liquidator of the Lessee
or ACA, Inc. or of substantially all of its property, or sequestering
substantially all of the Lessee's or ACA, Inc.'s property, and any such order,
judgment, decree, or sequestration remains in force undismissed, unstayed, and
unvacated for at least 90 days after the date of entry.
(i) Involuntary Bankruptcy. A petition against the Lessee or ACA, Inc.
in a proceeding under applicable bankruptcy laws or other insolvency laws, as
now or hereafter in effect, is filed and is not withdrawn or dismissed within 90
days thereafter, or, under any law providing for reorganization or liquidation
of corporations which shall apply to the Lessee or ACA, Inc., any court of
competent jurisdiction assumes jurisdiction, custody, or control of the Lessee
or ACA, Inc. or of substantially all of its property and such jurisdiction,
custody, or control remains in force unrelinquished, unstayed, and unterminated
for at least 90 days.
(j) Air Carrier Status. The Lessee fails or ceases to be a Section 1110
Person.
(k) ACA Guaranty. The ACA Guaranty ceases to be in full force and
effect, or ACA Inc. repudiates the validity of the ACA Guaranty, in each case,
at any time prior to the termination of such ACA Guaranty in accordance with its
terms.
. 15. Remedies
. Upon the occurrence of (x) any Event of Default specified in ss. 14(f), (g),
(h), or (i), this Lease shall be deemed to be in default without any act or
notice of any kind, all of which are hereby waived, and (y) any other Event of
Default, so long as it continues, the Lessor may, at its option, declare this
Lease to be in default, and in either case at any time thereafter, the Lessor
may exercise one or more of the following remedies as the Lessor in its sole
discretion shall lawfully elect:
(1) cancel (in the sense of UCC ss. 2A 505(1)), terminate or
rescind this Lease or cause the Lessee, upon the Lessor's written
demand and at the Lessee's cost and expense, to return promptly (and
the Lessee thereupon shall return promptly), all or such part of the
Aircraft as the Lessor so demands, to the Lessor or its order in the
manner and condition required by, and otherwise in accordance with all
the provisions of, ss. 5 as if the Aircraft were being returned at the
end of the Term, or if the Lessee does not so deliver such Item(s), the
Lessor may enter upon the premises where all or any part of the
Aircraft is located and take immediate possession of and remove the
same (together with any engine that is installed on the Airframe,
subject to the rights of any owner, lessor, lienor, or secured party of
such engine) by summary proceedings or otherwise, all without becoming
liable for or by reason of such entry or taking of possession or
removal, whether for the restoration of damage to property caused by
such action or otherwise;
(2) with or without taking possession thereof, sell any Item
at public or private sale, free and clear of any rights of the Lessee,
or otherwise dispose of, hold, use, operate, lease to others, or keep
idle any Item as the Lessor, in its sole discretion, may determine, all
free and clear of any rights or claims of the Lessee or any Sublessee
and without any duty to account to the Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except as
otherwise provided herein;
(3) whether or not the Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under clause (1) or
(2) above with respect to any Item, the Lessor, by written notice to
the Lessee specifying a payment date (the "Default Payment Date") which
shall be the Stipulated Loss Value Date next occurring not less than 10
days after the date of such notice, may cause the Lessee to pay to the
Lessor, and the Lessee shall pay to the Lessor, on the Default Payment
Date, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of all Basic Rent accruing on or after the Default Payment
Date), any unpaid Basic Rent due prior to the Default Payment Date
(together with interest on such amount at the Past Due Rate from the
Payment Date as of which such Basic Rent was not paid until the actual
date of payment of such amount) plus an amount equal to the excess, if
any, of (aa) the Basic Rent for the Aircraft for the remainder of the
Basic Term or then effective Renewal Term (disregarding any
cancellation under this ss. 15) over (bb) the aggregate Fair Market
Rental of the Aircraft for such period, after discounting such Basic
Rent and Fair Market Rental semi-annually to present value as of the
Default Payment Date at the rate per annum equal to the Debt Rate;
(4) if the Lessor sells the Aircraft, the Lessor may elect, in
lieu of exercising its rights under clause (3), to require the Lessee
to pay to the Lessor, and the Lessee in such event shall pay to the
Lessor, on the date of such sale, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of all Basic Rent accruing after
such sale occurs), any unpaid Basic Rent due before such sale date
less, if such sale date is not a Rent Payment Date, the pro rata
portion of Basic Rent payable in advance in respect of the period
commencing on the sale date and ending on the next Rent Payment Date
(together with interest on such amount at the Past Due Rate from the
Payment Date(s) as of which such Basic Rent was not paid until the
actual date of payment of such amount) plus the amount of any
deficiency between the net proceeds of such sale and the Stipulated
Loss Value of the Aircraft as of the date of such sale (or, if such
date is not a Stipulated Loss Value Date, then the Stipulated Loss
Value Date following the sale date, which Stipulated Loss Value shall,
if such sale date is a Rent Payment Date, include that portion of Basic
Rent payable in arrears on such date, and if such sale date is not a
Rent Payment Date, include the pro rata portion of Basic Rent payable
in arrears on the next Rent Payment Date in respect of the period
commencing on the Rent Payment Date immediately preceding the sale date
and ending on such sale date), together with interest on such
Stipulated Loss Value at the Past Due Rate from the Stipulated Loss
Value Date as of which such Stipulated Loss Value is determined until
the date of actual payment of such amount;
(5) the Lessor may proceed by appropriate court action or
otherwise to enforce the terms hereof or to recover damages for the
breach hereof, including payment of Basic Rent and Renewal Rent;
(6) the Lessor may exercise any other right or remedy available to it under applicable
laws; or
(7) the Lessor or any other Indemnitee may enforce payment of
Supplemental Rent.
In addition, the Lessee shall be liable, except as otherwise provided
above, to the Lessor and any other Indemnitee for any and all unpaid Rent due
hereunder before, during, and after the exercise of any of the foregoing
remedies, and for all reasonable legal fees and other costs and expenses
incurred by reason of the occurrence of any Event of Default or the exercise of
remedies with respect thereto, including any Make-Whole Premium and including
all costs and expenses incurred in connection with (xx) any bankruptcy or
insolvency proceeding, (yy) any retaking of any Item, or the return of any Item
in accordance with the terms of ss. 5, or (zz) in placing any Item in the
condition and airworthiness required by ss. 5.
. The Lessee shall be liable for all costs, charges, and expenses, including
reasonable legal fees and disbursements, incurred by the Lessor or any other
Indemnitee by reason of the occurrence of any Event of Default or the exercise
of remedies with respect thereto, which amounts shall be reimbursed on an
After-Tax Basis.
. To the extent permitted by applicable law, the Lessee hereby waives any and
all rights that the Lessee may have under any bankruptcy, insolvency, or similar
laws, rules, or regulations to the continued possession or use of the Aircraft,
or with respect to the payment of Rent therefor, or with respect to this Lease.
. No remedy referred to herein is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to in this ss. 15 or
otherwise available to the Lessor at law or in equity. No express or implied
waiver by the Lessor of any Default shall in any way be, or be construed to be,
a waiver of any future or subsequent Default. The failure or delay of the Lessor
in exercising any rights granted to it hereunder shall not constitute a waiver
of any such right upon the continuation or recurrence of the underlying event or
circumstance, and any single or partial exercise of any particular right by the
Lessor shall not exhaust that right or constitute a waiver of any other right
provided herein.
. 16. Purchase Options
. Provided that no Specified Default exists on the purchase date, the Lessee
shall have the option to purchase the Aircraft (i) on the EBO Date shown on
Exhibit B (the "EBO Date") for the EBO Price shown on Exhibit B (the "EBO
Price") plus any applicable Make-Whole Premium owing with respect to the
Certificates and, if such EBO Date is not a Rent Payment Date, less the pro rata
portion of Basic Rent (or Renewal Rent, as the case may be) payable in advance
in respect of the period commencing on the EBO Date and ending on the next Rent
Payment Date, and plus the pro rata portion of Basic Rent payable in arrears on
such next Rent Payment Date in respect of the period commencing on the Rent
Payment Date immediately preceding the EBO Date and ending on such EBO Date (and
if such option is exercised, any Basic Rent otherwise payable in advance on the
date of purchase shall not be due or payable); (ii) at the end of the Basic Term
or any Renewal Term, for the then-current Fair Market Value of the Aircraft; and
(iii) if a Materially Adverse Tax Event occurs with respect to the Aircraft, for
an amount equal to the then-current Fair Market Value of the Aircraft (or, if
greater, the Termination Value thereof), determined as of the date of purchase,
plus all accrued and unpaid Rent with respect to periods prior to the date of
purchase, less the pro rata portion of Basic Rent or Renewal Rent, as the case
may be, paid in advance on the Rent Payment Date immediately preceding the date
of purchase in respect of the period commencing on such purchase date and ending
on the next Rent Payment Date (including any applicable Make-Whole Premium owing
with respect to the Certificates), but excluding any Basic Rent payable in
advance on such payment date.
The Lessee may elect to exercise any such purchase option by providing
to the Lessor and the Indenture Trustee, in the case of the options described in
clauses (i) and (iii) above, not less than 30 days' prior written notice, in the
case of the option described in clause (ii) above, not less than 270 days' prior
written notice (which notice shall become irrevocable 180 days prior to the end
of the Basic Term or the applicable Renewal Term, as applicable, if not
previously revoked, and in the case of the option described in clause (iii)
above, not less than 90 days' prior written notice. Any purchase option
described in this ss. 16 may, at the election of the Lessee, be exercised by a
designee of the Lessee.
. On the purchase date specified by the Lessee under ss. 16(a), the Lessee shall
purchase the Aircraft from the Lessor and the Lessor shall sell the Aircraft to
the Lessee or its assignee or nominee, on an "as is, where is" basis, without
representation or warranty, express or implied (except as to the absence of
Lessor's Liens), for immediately available funds (U.S. dollars). Upon payment of
(1) such purchase price, and (2) all Supplemental Rent then due and owing, the
Lessor shall execute and deliver to the Lessee, or to the Lessee's assignee or
nominee, a ▇▇▇▇ of sale, without representations or warranties, express or
implied (except as to the absence of Lessor's Liens), for the Aircraft, together
with such other documents as may be required to release the Aircraft from the
terms and scope of this Lease and to transfer title thereto to the Lessee or
such assignee or nominee, and the Indenture Trustee shall execute and deliver an
Indenture release for the Aircraft, all in such form as the Lessee reasonably
requests and all at the Lessee's expense. If no purchase under this ss. 16 shall
have occurred on the applicable purchase date as the result of the Lessee's
failure to meet any condition to such purchase set forth in any Operative
Agreement, this Lease shall continue in full force and effect as if no notice
had been given by the Lessee.
. All notices or consents under this Agreement shall be in writing (including
telecopies), shall be in English, shall be effective on delivery, and shall be
addressed as follows (or to such other address as an addressee shall designate
by notice to the other party):
(a) if to the Lessee:
Atlantic Coast Airlines
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Lessor:
State Street Bank and Trust Company
of Connecticut, National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇▇▇▇▇)
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(with copies to the Indenture Trustee and to the Owner Participant at
its address specified in the Participation Agreement)
(c) if to the Indenture Trustee:
The First National Bank of Maryland
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
. This Lease shall bind, and (subject to limitations in the Operative
Agreements) shall benefit and may be enforced by, (a) the Lessor and its
successors and assigns, and (b) the Lessee and its successors and assigns.
Lessee will not, without the prior written consent of Lessor, assign any of its
rights or obligations hereunder or in the Aircraft except as otherwise provided
in the Operative Agreements. Lessor agrees that it will not assign or convey its
right, title and interest in or to this Lease or the Aircraft except as provided
in the Operative Agreements.
. If the Lessee fails to make any required payment of Rent or to perform or
comply with any of its other agreements herein, the Lessor or the Owner
Participant may (but shall not be obligated to), after giving reasonable advance
notice to the Lessee of the Lessor's intent to do so, make such payment or
perform or comply with such agreement, and the amount of such payment and of the
Lessor's and the Owner Participant's reasonable expenses incurred in connection
with such payment or the performance of or compliance with such agreement,
together with interest thereon at the Past Due Rate from (and including) the
date of making such payment or incurring such expenses to the date of payment by
the Lessee, shall be Supplemental Rent, payable by the Lessee upon demand. No
such payment or performance by the Lessor or the Owner Participant shall waive
any Default or relieve the Lessee of its obligations hereunder.
. On the Delivery Date, the Lessee will cause this Lease (including the Lease
Supplement) and the Indenture (including the Indenture Supplement) to be duly
filed and recorded at the FAA. In addition, the Lessee will promptly and duly
execute and deliver to the Lessor such further documents and assurances and take
such further action as the Lessor from time to time reasonably requests in order
to carry out more effectively the intent of this Lease and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor hereunder, including the execution and delivery of supplements or
amendments hereto, in recordable form, and the recording or filing of
counterparts hereof or thereof, in accordance with the laws of such
jurisdictions the Lessor from time to time reasonably deems advisable and, if
requested by the Lessor, the execution and delivery of terminations or releases
in connection with any transfer of any Item upon the termination, expiration, or
cancellation of this Lease in accordance with the terms hereof.
. If any successor trustee for the Lessor is appointed pursuant to the terms of
the Trust Agreement, such successor trustee shall, upon giving written notice to
the Lessee, succeed to all the rights, powers, and title of the Lessor hereunder
and shall be the Lessor and the owner of the Aircraft for all purposes hereof,
without the necessity of any consent or approval by the Lessee and without in
any way altering the terms of this Lease or the Lessee's obligations hereunder.
One such appointment and designation of a successor trustee shall not exhaust
the right to appoint and designate further successor trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly so long as this
Lease is in effect.
. State Street Bank and Trust Company of Connecticut, National Association is
entering into this Lease solely as trustee under the Trust Agreement and not in
its individual capacity, and shall not be personally liable for any of the
statements, representations, warranties, agreements, or obligations of the
Lessor hereunder or for any loss with respect thereto, as to all of which the
Lessee agrees to look solely to the Trust Estate; provided, that SSB shall be
liable hereunder for its own gross negligence or willful misconduct or for a
breach of its representations and warranties made in its individual capacity,
and SSB accepts the benefits of the indemnification granted, and representations
and warranties made, to it hereunder.
. 23. Amendments and Miscellaneous
. The terms of this Lease shall not be waived, modified, amended, supplemented,
or terminated in any manner whatsoever except by written instrument signed by
the Lessor and the Lessee.
. Except as otherwise provided herein or therein, all agreements, indemnities,
representations, and warranties in this Lease or the other Operative Agreements
shall survive the execution and delivery of this Lease and, with respect to
events (or, in the case of Taxes, to periods of time) occurring during the Term,
or relating to a Default or exercise of remedies with respect thereto which
extends beyond the Term, the expiration, cancellation, or other termination of
this Lease.
. Any provision of this Lease that is or becomes 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. To the extent permitted by applicable law, the Lessee and
the Lessor hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
. This Lease and the other Operative Agreements represent the entire agreement
of the parties hereto with respect to the subject matter hereof, and supersede
any and all prior understandings. This Lease is an agreement of lease, and
nothing herein shall be construed as conveying to the Lessee any right, title,
or interest in or to the Aircraft, except as lessee only.
. This Lease Agreement may be executed in any number of counterparts , each of
which shall be an original (except that only the counterpart bearing the receipt
executed by the Indenture Trustee shall be the original for purposes of
perfecting a security interest therein as chattel paper under the Uniform
Commercial Code), but all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Lease Agreement
by signing any such counterpart. To the extent that this Lease Agreement
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease Agreement may be created through the transfer or possession of any
counterpart other than the original chattel-paper counterpart, which shall be
the counterpart containing the receipt executed by the Indenture Trustee on its
signature page.
. THIS LEASE IS BEING DELIVERED IN THE STATE OF NEW YORK, AND SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
ANY CONFLICTS-OF-LAWS PRINCIPLE THAT WOULD APPLY THE LAWS OF ANY OTHER
JURISDICTION).
. The headings in this Lease are for convenience of reference only, and are not a substantive part of this Lease.
. 24. Performance by Sublessee
Performance of any or all of the Lessee's obligations under this Lease
by any Sublessee shall, for all purposes hereof, constitute performance by the
Lessee of such obligations to the extent of such performance; provided that the
Lessee shall remain primarily liable hereunder for the performance of all the
terms of this Lease to the same extent as if such sublease had not occurred.
25. Quiet Enjoyment.
So long as no Event of Default shall have occurred and be continuing,
the Lessor covenants that neither it nor any other Person lawfully claiming
through it shall interfere with the Lessee's or any Permitted Sublessee's right
to possess and use the Aircraft or the Lessee's ability to exercise its rights
and privileges under this Lease without hindrance or disturbance by it or any
such other Person.
26. Security For Lessor's Obligations.
(a) Security for Lessor's Obligations to Holders. In order to secure
the indebtedness evidenced by the Certificates, the Indenture provides for the
assignment by the Lessor to the Indenture Trustee of this Lease and for the
creation of a first mortgage and security interest in favor of the Indenture
Trustee on the Aircraft. The Lessee consents to and acknowledges such assignment
(subject to the reservations and conditions therein set forth) and the receipt
of a copy of the Indenture.
(b) Consent of Lessee to Assignment of Lease as Security. The Lessee
hereby acknowledges and consents to the Indenture Trustee's rights pursuant to
the terms of the Indenture to receive payments (other than Excepted Payments)
due under this Lease, to transfer or assign title to the Aircraft subject to
this Lease, to make (jointly with the Lessor where provided in the Indenture)
all waivers and agreements except as otherwise provided in the Indenture
(including ss. 8.01 thereof), to give all notices, consents, and releases and to
take all action upon the happening of an Event of Default (except as otherwise
specifically provided in the Indenture, including ss. 8.01 thereof), or to do
any and all other things whatsoever which the Lessor is or may become entitled
to do under this Lease (except as otherwise provided in the Indenture, including
ss. 8.01 thereof); all or any of which rights, obligations, benefits, and
interests may, pursuant to the terms of the Indenture, be reassigned or
retransferred by the Indenture Trustee at any time and from time to time (except
as otherwise provided in the Indenture); provided, that the Lessor, except to
the extent, and for such time as, it is unable to do so by virtue of the
Indenture, shall remain liable for the performance of all the covenants for
which it is obligated under this Lease notwithstanding such assignment.
. 27. Submission to Jurisdiction; Venue
(a) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTSOF THE STATE OF NEW YORK
IN THE COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT
TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(c) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARRISING OUT OF OR RELATING TO THIS AGREEMENT.
IN WITNESS WHEREOF, the Lessee and the Lessor have executed this Lease Agreement (Atlantic Coast
Airlines Trust No. ____).
ATLANTIC COAST AIRLINES, Lessee
By:
Title:
By:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION (not
in its individual capacity
(except as expressly
otherwise provided herein)
but solely as owner
trustee), Lessor
By:
Title:
[This is the Original counterpart of the Lease Agreement for chattel paper purposes.]
[or]
[This is a Duplicate executed counterpart of the Lease Agreement, and is not
the original for chattel paper purposes.]
EXHIBIT A
LESSOR'S INTEREST UNDER THIS LEASE SUPPLEMENT
IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. 1
(Atlantic Coast Airlines Trust No. ________)
This Lease Supplement No. 1 (Atlantic Coast Airlines Trust No.
_______), dated ___________ __, ____, is entered into between State Street Bank
and Trust Company of Connecticut, National Association, a national banking
association, not in its individual capacity, but solely as Owner Trustee under
the Trust Agreement (Atlantic Coast Airlines Trust No. _______) dated as of
September 1, 1997 (the "Lessor"), and Atlantic Coast Airlines, a California
corporation (the "Lessee").
Recitals:
The Lessor and the Lessee have entered into a Lease Agreement (Atlantic
Coast Airlines Trust No. ______), dated as of __________, 199_ (the "Aircraft
Lease", the defined terms in the Aircraft Lease being used in this Lease
Supplement with the same meaning as in the Aircraft Lease), which provides for
the execution and delivery of a supplement, substantially in the form of this
Lease Supplement, for the purpose of leasing under the Aircraft Lease the
aircraft and engines described below ("Aircraft") as and when delivered by the
Lessor to the Lessee in accordance with the terms of the Aircraft Lease.
The Aircraft Lease relates to the Aircraft.
A counterpart of the Aircraft Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such attachment,
is being filed for recordation on this date with the FAA as one document.
The Lessor and the Lessee agree as follows:
1. Delivered Aircraft. The Lessor hereby delivers and leases to the
Lessee under the Lease, and the Lessee hereby accepts and leases from the Lessor
under the Lease, the following described Canadair Regional Jet, Series 200ER
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date of
this Lease Supplement consists of the following:
(a) Canadair Regional Jet, Series 200ER Airframe; U.S. Registration Number _____; Manufacturer's
Serial No. ___; and
(b) Two General Electric CF34-3B1 engines bearing manufacturer's serial
nos. _______ and ______ (each of which has 750 or more rated takeoff horsepower
or the equivalent of such horsepower).
2. Delivery Date. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement.
3. Lessor's Cost. The Lessor's Cost of the Delivery Aircraft shall be
the amount set forth in Exhibit B to the Lease.
4. Term. The Term for the Delivered Aircraft shall commence on the
Delivery Date, and shall terminate on ______, 201_, unless earlier terminated or
extended pursuant to the terms of the Lease.
5. Rent. The Lessee hereby confirms its obligation to pay Rent for the Delivered Aircraft
throughout the Term thereof in accordance with the terms and provisions of the Lease.
6. Lessee's Acceptance of Delivered Aircraft. The Lessee hereby
confirms that the Lessee has accepted the Delivered Aircraft for all purposes
hereof and of the Lease. Such acceptance by the Lessee shall be without
prejudice to any rights of the Lessor or the Lessee against the Seller, the
Manufacturer, the Engine Manufacturer, or any vendor of equipment included in
the Aircraft.
7. Incorporation of Lease By Reference. All the provisions of the
Aircraft Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
8. Governing Law. THIS LEASE SUPPLEMENT IS BEING DELIVERED IN THE STATE
OF NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK (EXCLUDING ANY CONFLICTS-OF-LAWS PRINCIPLE THAT WOULD
APPLY THE LAWS OF ANY OTHER JURISDICTION).
9. Agreement as Chattel Paper. To the extent that this Lease Supplement
constitutes chattel paper (as defined in the Uniform Commercial Code), no
security interest in this Lease Supplement may be perfected through the
possession of any counterpart other than the original chattel paper counterpart,
which shall be the counterpart marked "Original" in its signature page.
10. Counterparts. This Lease Supplement may be executed in any number
of counterparts, each of which shall be an original (except that only the
counterpart marked "Original" shall be the original for purposes of perfecting a
security interest therein as chattel paper under the Uniform Commercial Code),
but all of which taken together shall constitute one and the same instrument and
any of the parties hereto may execute this Lease Supplement by signing any such
counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have executed this Lease Supplement No. 1.
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee (Lessor)
By:
Title:
ATLANTIC COAST AIRLINES (Lessee)
By:
Title:
By:
Title:
24
Draft 6 - Sept. 29 '97
------------------------
SCHEDULE I
DEFINITIONS
(ATLANTIC COAST AIRLINES TRUST NO. ______)
GENERAL PROVISIONS
The following terms shall have the following meanings for all purposes of the
Operative Agreements (other than the Pass Through Agreements, the Intercreditor
Agreement, and the Liquidity Facilities) referred to below, unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Schedule and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements shall be
deemed to mean such agreements as amended and supplemented from time to time,
and (ii) references to parties to agreements shall be deemed to include the
successors and permitted assigns of such parties.
DEFINED TERMS:
Abatements: defined in ss. 4 of the Lease.
ACA Guaranty: the Guaranty, dated as of the Certificate Closing Date, issued by ACA Inc. in favor of the
Lessor, the Indenture Trustee, and the Liquidity Providers, pertaining to the Aircraft.
ACA Inc.: Atlantic Coast Airlines, Inc., a Delaware corporation.
Additional Insureds: the Lessor (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities), each Liquidity Provider, and their successors and assigns,
and the directors, officers, members, employees, and agents of each of the
foregoing.
Aeronautics Authority: as appropriate, the Federal Aviation Administration and/or the Administrator of
the Federal Aviation Administration, or any Person, governmental department, bureau, commission or agency located
in the United States succeeding to the functions, of the foregoing.
Affidavits: the affidavits of citizenship of the Owner Trustee and the Owner Participant.
Affiliate: with respect to any Person, any other Person directly or
indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis: a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related current credits or deductions actually realized) resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received.
Air Carrier: any U.S. Air Carrier and any 1'foreign air carrier" (as defined in the Transportation Code)
as to which there is in force a permit granted under ss. 41302 of the Transportation Code.
Aircraft: the Airframe and the two Engines.
Airframe: the Canadair Regional Jet Series 200ER aircraft (excluding
the Engines or engines from time to time installed thereon) to be leased by the
Lessor to the Lessee pursuant to the Lease and the Lease Supplement and having
the United States FAA registration number initially and manufacturer's serial
number specified in the Lease Supplement, including (i) all Parts in respect
thereof and (ii) any Replacement Airframe substituted pursuant to ss. 11(a)(1)
of the Lease.
Application: the application for registration of the Aircraft with the FAA in the name of the Owner
Trustee.
Appraisal: the report prepared by BK Associates, Inc. and to be delivered to the Owner Participant (with
an abbreviated report to the Lessee) on the Delivery Date pursuant to ss. 4.02(h) of the Participation Agreement.
Appraisal Procedure: a procedure whereby an independent appraiser,
chosen by the Lessor from the three appraisers selected by the Lessee as herein
provided and reasonably acceptable to the Lessor, determines the amount in
question. The Lessee shall, within 15 days of a request by the Lessor, provide
the Lessor with the names of three independent appraisers. If any appraiser so
nominated is not reasonably acceptable to the Lessor, the Lessor shall promptly
notify the Lessee, and the Lessee shall have five Business Days to nominate
another appraiser reasonably acceptable to the Lessor. Within 15 days
thereafter, the Lessor shall select and employ one of such appraisers. If the
Lessee or the Lessor fails to make its selection in a timely manner, the other
party may make such selection and proceed with the appraisal. The decision of
the appraiser so appointed shall be given within 10 days after being appointed.
Such appraiser's decision shall be binding and conclusive on the Lessor and the
Lessee. The Lessee and the Lessor shall each pay one-half of the fees and
expenses of such appraiser, provided that the Lessee shall pay all such fees and
expenses in the case of any appraisal pursuant to ss. 15 of the Lease.
Average Life Date: for any Certificate, the date which follows the prepayment date by a period equal to
the Remaining Weighted Average Life of such Certificate.
Bankruptcy Code: Title 11 of the United States Code, as amended, and any successor thereto.
Basic Rent: the aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to
ss. 3(b) of the Lease, adjusted pursuant to ▇▇.▇▇. 3(d) and 3(e) of the Lease.
Basic Rent Rate: set forth in Exhibit D to the Lease.
Basic Term: the period commencing at the beginning of the day on the Delivery Date and ending at the end
of the day on the Expiration Date, or such earlier date on which the Lease shall be terminated as provided
therein.
Beneficial Interest: the interest of the Owner Participant (or the Initial Owner Participant, as the
case may be) under the Trust Agreement.
Business Day: any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York, NY,
Washington, D.C. and the city in the United States in which the office or agency
is maintained by the Pass Through Trustee for the payment of the Pass Through
Certificates, and after the Lien of the Indenture is discharged, Hartford, CT.
Certificate Closing Date: the date of the closing with respect to the purchase of Certificates by the
Pass-Through Trustee contemplated by ss. 2.01(b) of the Participation Agreement.
Certificate Holder: see "Holder".
Certificates: the Equipment Trust Certificates (Atlantic Coast Airlines Trust No. _________), issued by
the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Citizen of the United States: a citizen of the United States as defined in ss. 40102(a)(15) of the
Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time
in effect.
Class A Liquidity Provider has the meaning specified in ss. 1.01 of the
lntercreditor Agreement.
Class B Liquidity Provider has the meaning specified in ss. 1.01 of the
lntercreditor Agreement.
Class C Liquidity Provider has the meaning specified in ss. 1.01 of the
Intercreditor Agreement.
Closings: the closing with respect to the acquisition of the Pass Through Certificates by the Placement
Agent and the closing with respect to the acquisition of Certificates by the Pass Through Trustee.
Code: the Internal Revenue Code of 1986, as amended from time to time,
or any similar legislation of the United States enacted to supersede, amend, or
supplement such Code (and any reference to a provision of the Code shall refer
to any successor provision(s), however designated).
Collateral Account: the deposit account established and maintained pursuant to ss. 2.13 of the Indenture.
Collateral Account Control Agreement: the Collateral Account Control Agreement dated as of September 30,
1997 among SSB, the Indenture Trustee, and the Owner Trustee.
Commitment: the amount of the Owner Participant's participation in the Purchase Price required to be
made available or paid as provided in ss. 3.02 of the Participation Agreement.
Corporate Trust Administration: the Corporate Trust Administration
office of the Owner Trustee located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇▇▇▇▇),
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Corporation Trust Administration, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to the Lessee, the Owner Participant and the Indenture Trustee.
Corporate Trust Department: the Corporate Trust Department office of
the Indenture Trustee located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department, or such other office at which the
Indenture Trustee's corporate trust business shall be administered which the
Indenture Trustee shall have specified by notice in writing to the Lessee, the
Owner Participant and the Owner Trustee.
CRAF Program has the meaning specified in ss. 13(d) of the Lease.
Cut-Off Date: June 30, 1998.
DOT: the U.S. Department of Transportation or any successor thereto.
Debt Portion: the amount specified as such on Schedule III to the Participation Agreement.
Debt Rate. the weighted average (based on Outstanding principal amount) rate of interest on the
Certificates issued pursuant to the Indenture.
Default: (a) any event or condition which, with the lapse of time or the giving of notice, or both,
would constitute an Event of Default or (b) an Event of Default.
Default Payment Date: defined in ss. 15(a)(3) of the Lease.
Deficiency Agreement. The Deficiency Agreement, dated as of the Delivery Date, among SDIQ, the Owner
Participant, and the Owner Trustee, pertaining to the Aircraft.
Delivery Date: the date on which the Aircraft is delivered and sold by the Seller to the Lessor and
leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease
Supplement.
Delivery Notice: notice of the Aircraft's Delivery Date, given by the
Lessee as provided in ss. 3.01 of the Participation Agreement and including any
notice with respect to a postponed Delivery Date given by the Lessee pursuant to
ss. 3.05(c) of the Participation Agreement.
Downgrade Drawing has the meaning specified in ss. 1.01 of the
Intercreditor Agreement.
EBO: the early buy-out purchase option specified in ss. 16(a)(i) of the Lease.
EBO Date has the meaning set forth in ss. 16(a) of the Lease.
EBO Price has the meaning set forth in ss. 16(a) of the Lease.
Eligible Deposit Account: either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution with corporate trust powers organized
under the laws of the United States or any state thereof, or the District of
Columbia, and whose deposits are insured by the Federal Deposit Insurance
Corporation, provided that such institution also has a combined capital and
surplus of at least $100,000,000 and a rating of A or better from the Thomson
Bank Watch.
Eligible Institution: a depository institution organized under the laws
of the United States or any one of the states thereof, or the District of
Columbia, or any domestic branch of a foreign bank, which in any such case at
all times (a) has either (x) a long-term unsecured debt rating of at least Aa2
by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's,
(b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y)
a short-term certificate of deposit rating of A-1+ by S&P, and (c) is a member
of the Federal Deposit Insurance Corporation.
Engine: each of the two General Electric CF34-3-B1 engines listed by
its manufacturer's serial number in the Lease Supplement and leased pursuant to
the Lease, whether or not from time to time installed on the Airframe or
installed on any other airframe or on any other aircraft, and any Replacement
Engine which may from time to time be substituted for an Engine pursuant to the
Lease, together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the Indenture,
such replaced Engine shall cease to be an "Engine" under the Lease. The term
"Engines" means, as of any date of determination, both Engines then leased to
the Lessee pursuant to the Lease.
Engine Manufacturer: General Electric Company, a New York corporation.
Engine Manufacturer's Consent: The General Electric Company Engine Consent and Agreement with respect to
the Engine Warranty Assignment, dated as of the Delivery Date, executed by the Engine Manufacturer.
Engine Warranty Assignment: The Warranty Assignment (Atlantic Coast
Airlines Trust No. __) dated as of the Delivery Date between the Lessor and the
Lessee with respect to the Engine warranties under the GTA in substantially the
form of Exhibit F to the Participation Agreement, as such form may be amended on
or prior to the Delivery Date; provided that no such amendment shall materially
adversely affect the interests of the Holders of the Certificates.
ERISA: the Employee Retirement Income Security Act of 1974, as amended.
Estimated Expense Amount has the meaning specified in ss. 10.01(a) of
the Participation Agreement.
Event of Default: each of the events specified in ss. 14 of the Lease.
Event of Loss: any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) theft or disappearance for a period in
excess of 90 consecutive days; (ii) destruction, damage beyond economic repair
or rendition of such property permanently unfit for normal use for any reason
whatsoever; (iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or compromised
total loss; (iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days (or 30
consecutive days for the appropriation of title, or, in any of the cases in this
clause (iv), such shorter period ending on the expiration of the Term); (v)
condemnation, confiscation or seizure of, or requisition of title to or use of
such property by the Government for a period extending beyond the term of the
Lease (as the same may be extended pursuant to the terms thereof), provided that
no Event of Loss shall be deemed to have occurred, and the term of the Lease
shall be extended automatically for a period of six months in the event that the
Aircraft is requisitioned by the Government pursuant to an activation under the
CRAF Program; and (vi) as a result of any law, rule, regulation, order or other
action by the Aeronautics Authority or other governmental body having
jurisdiction, the use of the Aircraft or Airframe in the normal course of air
transportation of passengers shall have been prohibited by virtue of a condition
affecting all Canadair Regional Jet Series 200ER aircraft equipped with engines
of the same make and model as the Engines for a period of 180 consecutive days
(or beyond the end of the Term), unless the Lessee, prior to the expiration of
such 180-day period, shall be diligently carrying forward all necessary and
desirable steps to permit normal use of the Aircraft and shall within 12 months
have conformed at least one Canadair Regional Jet Series 200ER aircraft (but not
necessarily the Aircraft) to the requirements of any such law, rule, regulation,
order or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner. The date of such Event of Loss shall be (aa) the
91st day following loss of such property or its use due to theft or
disappearance (or the end of the Term if earlier); (bb) the date of any
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use; (cc) the date of any insurance settlement on
the basis of an actual, constructive or compromised total loss; (dd) the 181st
day following condemnation, confiscation, seizure or requisition of title to or
use of such property by a foreign government referred to in clause (iv) above
(or the 31st day in the case of appropriation of title, or the end of the Term
if earlier than such 181st or 31st day); (ee) the last day of the Term (as
automatically extended by six months in the case of an activation under the CRAF
Program) in the case of requisition of title to or use of such property by the
Government; and (ff) the last day of the applicable period referred to in clause
(vi) above (or if earlier, the end of the Term without the Lessee's having
conformed at least one Canadair Regional Jet Series 200ER aircraft to the
applicable requirements). An Event of Loss with respect to the Aircraft shall be
deemed to have occurred if any Event of Loss occurs with respect to the
Airframe.
Excepted Payments: collectively, (i) indemnity, expense, reimbursement
or other payments paid or payable by the Lessee in respect of the Owner
Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant (whether
directly or through the Owner Trustee) or any Affiliate thereof maintained in
accordance with ss. 12(e) of the Lease but not required under ss. 12 of the
Lease, (iv) all right, title and interest of the Owner Participant or the Owner
Trustee in, to and under the Tax Indemnity Agreement, including payments of
Supplemental Rent by the Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) any purchase price paid or payable to the Owner
Participant for its interest in the Trust Estate pursuant to ss. 7.03(d) of the
Participation Agreement, (vi) any Transaction Costs paid or payable by the
Lessee to the Owner Trustee (to the extent for its sole benefit) or the Owner
Participant pursuant to the Lease or the Participation Agreement, (vii) payments
under the RVG and/or the Deficiency Agreement, (viii) any payments in respect of
interest to the extent attributable to payments referred to in clauses (i)
through (vi) above, (ix) any amount payable under the ACA Guaranty in respect of
the foregoing, (x) any right to demand, collect or otherwise receive and enforce
the payment of any amount described in clauses (i) through (v) and (vii) above,
and (xi) any right to exercise any election or option or make any decision or
determination, or to give or receive any notice, consent, waiver or approval, or
to take any other action in respect of, but in each case, only to the extent
relating to, any Excluded Payments specified in clauses (i) through (x) above.
Expenses has the meaning specified in ss. 9.01(a) of the Participation
Agreement.
Expiration Date: _____________, 201__.
FAA: see "Federal Aviation Administration".
FAA ▇▇▇▇ of Sale: the ▇▇▇▇ of sale for the Airframe on AC Form 8050-2,
or such other form as may be approved by the Aeronautics Authority, executed by
the Seller in favor of the Owner Trustee and dated the Delivery Date.
Fair Market Rental: the amount obtainable in an arm's-length
transaction between an informed and willing lessee under no compulsion to lease
and an informed and willing lessor under no compulsion to lease, in accordance
with a net lease on terms and conditions (except as to the amount of Basic Rent)
as provided in the Lease. Such amount shall be determined assuming that the
Aircraft is in the condition required by the Lease, excluding Airworthiness
Directives that would not be required to be made until after the applicable
renewal period begins (except that a determination of Fair Market Rental
pursuant to ss. 15(a)(3) of the Lease shall be based on the actual condition of
such property), and assuming that all Removable Improvements have been removed.
If the Lessor and the Lessee do not agree upon Fair Market Rental, it shall be
determined in accordance with the Appraisal Procedure.
Fair Market Value: the amount obtainable in an arm's-length transaction
between an informed and willing buyer under no compulsion to buy and an informed
and willing seller under no compulsion to sell. Such amount shall be determined
assuming that the Aircraft is in the condition required by the Lease, excluding
Airworthiness Directives that would not be required to be made until after the
valuation date (except that a determination of Fair Market Value pursuant to ss.
15(a)(3) of the Lease shall be based on the actual condition of such property),
and assuming that all Removable Improvements have been removed. If the Lessor
and the Lessee do not agree upon Fair Market Value, it shall be determined in
accordance with the Appraisal Procedure.
Federal Aviation Administration: the United States Federal Aviation Administration and any successor
agency or agencies thereto.
Final Drawing has the meaning specified in ss. 1.01 of the
lntercreditor Agreement.
FNBM: The First National Bank of Maryland, a national banking association.
Government: the United States of America or an agency or instrumentality thereof the obligations of
which bear the full faith and credit of the United States of America.
GTA: the General Terms Agreement dated as of October, 1996 between the
Engine Manufacturer and the Lessee with respect to certain support services for
the Engines, as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement related to the Engines, to the extent assigned to the Owner Trustee
pursuant as the Engine Warranty Assignment.
Holder or Holder of a Certificate: as of any particular time, the
Person in whose name a Certificate shall be registered (but not including the
holder of any Pass Through Certificate).
Improvement has the meaning set forth in ss. 9(e) of the Lease.
incorporated in: incorporated or installed in, attached to, or otherwise made a part of.
Indemnitee: each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Subordination Agent, in its individual capacity and in
its capacity as Subordination Agent, each Liquidity Provider, the Owner
Participant, the Indenture Trustee, in its individual capacity and as trustee,
any Owner Participant Guarantor, and any successor (including any trustee which
may succeed to the Lessor's interest under the Lease) and Affiliate, and, in
each case, any assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate, and the Trust Indenture Estate. Neither the
Pass Through Trustee nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture: the Trust Indenture and Security Agreement (Atlantic Coast Airlines Trust No. ______), dated
as of September 26, 1997, between the Lessor and the Indenture Trustee, as supplemented by the Indenture
Supplement.
Indenture Default: (a) any event or condition which, with the lapse of time or the giving of notice, or
both, would constitute an Indenture Event of Default, or (b) any Indenture Event of Default.
Indenture Documents has the meaning specified in the Granting Clause of
the Indenture.
Indenture Event of Default: each of the events specified in ss. 7.01 of the Indenture.
Indenture Supplement: Indenture Supplement No. 1 (Atlantic Coast Airlines Trust No. ____), to be dated
the Delivery Date, substantially in the form of Exhibit A to the Indenture.
Indenture Trustee: The First National Bank of Maryland, a national banking association, not in its
individual capacity but solely as trustee under the Indenture.
Indenture Trustee's Liens: any Lien against, on or with respect to the
Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or any
part thereof resulting from (i) claims against the Indenture Trustee not related
to the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements, or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity in respect of which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent Investment Banker: an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
Initial Owner Participant: Atlantic Coast Airlines, a California corporation.
Initial Reoptimization Date: has the meaning specified in ss. 2.03(b) of the Participation Agreement.
Intercreditor Agreement: the Intercreditor Agreement dated as of September 25, 1997, among the Pass
Through Trustees, the Class A Liquidity Provider, the Class B Liquidity Provider, the Class C Liquidity Provider
and the Subordination Agent.
Interest Drawing has the meaning specified in ss. 1.01 of the
lntercreditor Agreement.
Invoice: the invoice for the Aircraft given by the Seller to the Lessor.
Item or Item of Equipment: the Airframe or an Engine.
JAA: the Joint Aviation Authority (or any successor thereto) of the European Union.
Lease: the Lease Agreement (Atlantic Coast Airlines Trust No. ____)
dated as of the Delivery Date, entered into by the Lessor and the Lessee
concurrently with the execution and delivery of the Indenture Supplement, in
substantially the form of Exhibit B to the Participation Agreement, as such form
may be amended on or prior to the Delivery Date as provided in the Participation
Agreement, including, without limitation, supplementation by one or more Lease
Supplements entered into pursuant to the applicable provisions of the Lease.
Lease Supplement:. Lease Supplement No. 1 (Atlantic Coast Airlines Trust No. ____), to be dated the
Delivery Date, substantially in the form of Exhibit A to the Lease.
Lease Term: the period commencing on the Delivery Date and ending at the end of the Basic Term.
Lessee: Atlantic Coast Airlines, a California corporation.
Lessee Documents has the meaning set forth in ss. 6.01(b) of the
Participation Agreement.
Lessor: State Street Bank and Trust Company, a Massachusetts trust company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Cost: has the meaning set forth in Exhibit B of the Lease.
Lessor's Estate: all estate, right, title and interest of the Owner
Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft,
the Lease, any Lease Supplement, the FAA ▇▇▇▇ of Sale, the Warranty ▇▇▇▇ of
Sale, the Purchase Agreement, the Purchase Agreement Assignment, the PAA
Consent, any warranty with respect to the Airframe and the Engines, all amounts
of Basic Rent and Supplemental Rent, including without limitation, insurance
proceeds (other than insurance proceeds payable to or for the benefit of the
Owner Trustee in its individual capacity or the Owner Participant) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens: Liens against, on or with respect to the Aircraft, any
Engine, the Lessor's Estate or the Trust Indenture Estate or any part thereof,
title thereto or any interest therein arising as a result of (i) claims against
the Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant or any Affiliate of such Owner Participant, in each case not related
to the Operative Agreements or the transactions contemplated thereby, (ii) acts
or omissions of the Lessor in its individual capacity or as Owner Trustee, or of
the Owner Participant or any Affiliate of such Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant or any Affiliate of such Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of ss. 8.01(b) or 9.01(b) thereof and which are not required
to be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement,
or (iv) claims against the Lessor, in its individual capacity or as Owner
Trustee, or the Owner Participant arising from the transfer by the Lessor or the
Owner Participant of its interests in the Aircraft or any Engine other than a
transfer of the Aircraft pursuant to ss. 3(g), 3(i), 11, 13(a), 15, or 16 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in ss. 15 of the Lease.
Letter of Credit: the Letter of Credit issued by CrestarBank in favor of the Indenture Trustee as
security for the obligations of the Lessee pursuant to the first sentence of Section 7.02(b) of the Participation
Agreement.
Lien: any mortgage, pledge, lien, charge, encumbrance, lease, security
interest (including any conditional sale agreement, equipment trust agreement,
or other title retention agreement), statutory right in rem, claim, or other
similar interest of any nature whatsoever.
Liquid Collateral: all amounts and securities deposited from time to
time in the Collateral Account and all the products, investments, earnings and
proceeds of the foregoing, including, but not limited to, all proceeds of the
investment or conversion thereof, voluntary or involuntary, into cash, Specified
Investments or other property, all rights to payment of any and every kind, and
other forms of obligations, and instruments and other property which at any time
constitute all or part or are included in the proceeds of any of the foregoing.
Liquidity Facility has the meaning specified in ss. 1.01 of the
lntercreditor Agreement.
Liquidity Provider has the meaning specified in ss. 1.01 of the
Intercreditor Agreement.
Losses has the meaning specified in ss. 17.02(a) of the Participation
Agreement.
Loss Payment Date has the meaning specified in ss. 11(a)(2) of the
Lease.
Majority in Interest of Certificate Holders: as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Certificates outstanding as of such date (excluding for purposes
of this definition any Certificates held by (i) the Owner Trustee or the Owner
Participant or any interests of the Owner Participant unless all Certificates
then outstanding are held by the Owner Participant, (ii) the Lessee, or (iii)
any Affiliate of any thereof).
Make-Whole Premium: an amount determined as of the third Business Day
before the applicable Prepayment Date (or date of purchase, as the case may be)
which an Independent Investment Banker determines to be equal to the excess, if
any, of (i) the present value of the remaining scheduled payments of such
principal amount or portion thereof and interest thereon to the Maturity of such
Certificate computed by discounting such payments on a semi-annual basis on each
Payment Date (assuming a 360-day year consisting of twelve 30-day months) at a
discount rate equal to the Treasury Yield, all as determined by the Independent
Investment Banker over (ii) the outstanding principal amount of such Certificate
plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to the Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule IV to the Participation Agreement.
Manuals and Technical Records has the meaning set forth in ss. 9(b) of
the Lease.
Manufacturer: Bombardier Inc., a Canadian corporation.
Materially Adverse Tax Event: any event (other than excessive foreign
usage of the Aircraft) that makes it more likely than not that the Lessee will
be required to indemnify any Indemnitee for Taxes under any of the Operative
Agreements or the Owner Participant under the Tax Indemnity Agreement, or both,
provided that (i) the estimated aggregate of such indemnity payments (computed
as a hypothetical adjustment of Basic Rent or, if applicable, Renewal Rent and
disregarding any indemnity payments waived by such Indemnitee) over the
then-remaining Term is equal to at least 5% of Basic Rent (and, if applicable,
Renewal Rent) payable over the remaining Term, and (ii) future payments of the
Taxes giving rise to the indemnity or indemnities will not be required if the
Lessee purchases the Aircraft.
Maturity: with respect to any Certificate, the date on which the final principal amount of such
Certificate is scheduled to be due and payable.
Minimum Maintenance Standards has the meaning specified in ss. 9(b) of
the Lease.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc.
Net Present Value of Rents: the net present cost to the Lessee, as of
the Delivery Date, of all Basic Rent payments through the EBO Date, plus the EBO
Price, discounted at the Debt Rate compounded semi-annually.
Non-U.S. Person: any Person other than a U.S. Person.
Obsolete Parts: Parts which the Lessee in good faith determines to be
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine and which the Lessee is authorized to remove from the Aircraft, and not
replace, pursuant to the last sentence of ss. 9(d) of the Lease.
Offering Memo: the Lessee's September 19, 1997 Offering Memorandum concerning the Pass-Through
Certificates.
Officer's Certificate: when delivered pursuant to the Indenture, a certificate signed by a Responsible
Officer of the Lessee or the Owner Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in ss. 15.07 of the Indenture.
Old Lease: the ________, 1997 Aircraft Interim Lease Agreement, between the Seller and the Lessee,
concerning the Aircraft.
Old Lease Termination: the Lease Termination Agreement, dated the date of the Lease Supplement, between
the Seller and the Lessee, pertaining to the Old Lease.
Operative Agreements: the Participation Agreement, the Trust Agreement,
the FAA ▇▇▇▇ of Sale, the Warranty ▇▇▇▇ of Sale, the ACA Guaranty, the Purchase
Agreement, the Purchase Agreement Assignment, the PAA Consent, the Engine
Warranty Assignment, the Lease (including the Lease Supplement), the Owner
Participant Guaranty, if any, the Certificates outstanding at the time of
reference, the Indenture (including the Indenture Supplement), the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the Deficiency
Agreement, the RVG, the Collateral Account Control Agreement, and any Assignment
and Assumption Agreement.
Opinion of Counsel: when delivered pursuant to the Indenture, a written
opinion of legal counsel, who in the case of counsel (a) for the Lessee may be
(i) the general counsel of the Lessee, (ii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP or a successor
firm, or (iii) other outside counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee, and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and reasonably
satisfactory to the Lessee and, in the case of the Owner Trustee, reasonably
satisfactory to the Indenture Trustee.
Outstanding: when used with respect to Certificates, as of the date of determination and subject to the
provisions of ss. 10.04 of the Indenture, all Certificates theretofore executed and delivered under the Indenture,
with the exception of the following:
(i) Certificates theretofore canceled by the Indenture Trustee
or delivered to the Indenture Trustee for cancellation
pursuant to ss. 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture
Trustee in trust for the Holders of such Certificates pursuant
to ss. 14.01 of the Indenture; provided, that if such
Certificates are to be prepaid, notice of such prepayment has
been duly given pursuant to the Indenture or provision
therefor satisfactory to the Indenture Trustee has been made;
and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to
Article II of the Indenture.
Owner Participant: the Person to whom on the Delivery Date (or, if
earlier, the Transfer Date) the Initial Owner Participant shall transfer its
Beneficial Interest pursuant to Section 3.02 of the Participation Agreement and
any successors thereto, and any Person to which the Owner Participant transfers,
in accordance with the Trust Agreement and the Participation Agreement, its
right, title and interest in and to the Operative Agreements and the Lessor's
Estate.
Owner Participant Guarantor: the provider of an Owner Participant Guaranty.
Owner Participant Guaranty: any guaranty delivered in compliance with ss.__(d) of the Participation
Agreement.
Owner Trustee: State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity except as otherwise
expressly stated, but solely as trustee under the Trust Agreement.
Owner Trustee Guarantor: the provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty: any guaranty delivered in compliance with ss. 11.01(b)(ii) of the Participation
Agreement.
Owner's Economic Return: the Owner Participant's anticipated net
after-tax yield and aggregate after-tax cash flow during the Basic Term, using
the multiple investment sinking fund method of analysis, computed on the basis
of the same methodology and assumptions, including tax assumptions, as were
utilized by the initial Owner Participant in determining the Basic Rent, EBO
Price, EBO Date, Stipulated Loss Values and Termination Values, as the case may
be, as in effect on the date of execution of the Participation Agreement by the
Owner Participant as such assumptions may be adjusted for events which have been
the basis of adjustments to Rent pursuant to ss. 3(d) of the Lease.
PAA Consent: the PAA Consent, dated as of the Delivery Date, executed by the Manufacturer and pertaining
to the Aircraft.
Participation Agreement: the Participation Agreement (Atlantic Coast
Airlines Trust No. ____), dated as of September 30, 1997, among the Lessee, the
Owner Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as owner trustee, the Initial Owner Participant,
the Indenture Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as indenture trustee, the Pass-Through
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as Pass-Through trustee and the Subordination Agent not in
its individual capacity except as otherwise expressly provided therein, but
solely as subordination agent.
Parts: all appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated in the
Airframe or any Engine or title to which remains vested in the Lessor pursuant
to ss. 9(d) of the Lease.
Pass-Through Agreement: each of the four Pass-Through Trust Agreements dated as of September 25, 1997
among the Lessee, ACA Inc. and the Pass-Through Trustee.
Pass-Through Certificates: any of the Pass-Through Certificates,
1997-1-A, the Pass-Through Certificates, 1997-1-B, the Pass-Through
Certificates, 1997-1-C, or the Pass-Through Certificates, 1997-1-D, in each case
as issued by the related Pass-Through Trust; and "Pass-Through Certificates"
means all of the Pass-Through Certificates issued by each of the Pass-Through
Trusts.
Pass-Through Closing Date: the Business Day on which the sale of the Pass-Through Certificates to the
Placement Agent pursuant to the Placement Agreement takes place.
Pass-Through Trust:. the Atlantic Coast Airlines 1997-1 Pass-Through
Trust Class A, Atlantic Coast Airlines 1997-1 Pass-Through Trust Class B,
Atlantic Coast Airlines 1997-1 Pass-Through Trust Class C, and Atlantic Coast
Airlines 1997-1 Pass-Through Trust Class D, in each case formed pursuant to the
Pass-Through Agreement; and "Pass-Through Trusts" means all of such Pass-Through
Trusts.
Pass-Through Trustee: The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Agreement and each Pass-Through Trust.
Past Due Rate: in respect of (a) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid in
full equal to 2% plus the Debt Rate, and (b) any principal of or interest on any
Certificate or any other amount payable under the Indenture, any Certificate or
any other Operative Agreement that is not paid when due (whether at Maturity, by
acceleration, by optional or mandatory prepayment or otherwise) to any Holder,
the Indenture Trustee or the Pass-Through Trustee, a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to (i) in the case of any such amount payable to
the Holder of any Certificate, 2% plus the interest rate applicable to such
Certificate, and (ii) in the case of any other such amount, 2% plus the Debt
Rate (but, in each case, in no event greater than the maximum interest rate
permitted by applicable law).
Payment Date: each January 1 and July 1, commencing on January 1, 1998.
Permitted Air Carrier: (1) any Section 1110 Person that is not subject
to bankruptcy or similar proceedings when the sublease begins, (2) after the end
of the Recovery Period (or before that date, if the Lessee prepays in a lump sum
any indemnity required under the Tax Indemnity Agreement as a result of a
sublease to such foreign air carrier), any foreign air carrier that is not
subject to bankruptcy or similar proceedings when the sublease term begins and
that is principally based in and a domiciliary of any foreign country listed on
Exhibit E-2 to the Lease, except those that do not maintain normal diplomatic
relations with the United States or with which it would constitute a breach of
applicable laws for the Lessor, the Indenture Trustee, or the Owner Participant
to engage directly or indirectly in business, or (3) after the end of the
Recovery Period (or before that date, if the Lessee prepays in a lump sum any
indemnity required under the Tax Indemnity Agreement as a result of a sublease
to such foreign carrier), with the Owner Participant's prior written consent,
any foreign air carrier that is not principally based in and a domiciliary of a
country listed on Exhibit E-2 to the Lease, if at the time of such sublease the
Owner Participant receives an opinion satisfactory to the Owner Participant from
counsel satisfactory to the Owner Participant to the effect that there exists no
possessory rights in favor of such sublessee under the laws of such sublessee's
country which would, upon the bankruptcy of or other default by the Lessee (and
assuming that at such time the sublessee is not insolvent or bankrupt) prevent
the return of the Aircraft or part thereof to the Lessor in accordance with and
when permitted by the terms of the Lease upon the exercise by the Lessor of its
remedies thereunder, provided that at the time of the sublease the United States
maintains diplomatic relations with the country in which such foreign air
carrier is based.
Permitted Investments: (a) direct obligations of the United States of
America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) certificates of deposit issued by, or bankers' acceptances of, or
time deposits or a deposit account with, any bank, trust company, or national
banking association incorporated or doing business under the laws of the United
States of America or one of the states thereof, having a combined capital and
surplus of at least $100,000,000 and having a rating of "A" or better from the
▇▇▇▇▇ Bank Watch Service, (d) commercial paper issued by companies in the United
States which directly issue their own commercial paper and which are doing
business under the laws of the United States of America or one of the states
thereof and in each case having a rating assigned to such commercial paper by a
nationally recognized rating organization in the United States of America equal
to the highest rating assigned by such organization, or (e) obligations of the
type described in clauses (a) through (d) above, purchased from any bank, trust
company, or banking association referred to in clause (c) above pursuant to
repurchase agreements obligating such bank, trust company, or banking
association to repurchase any such obligation not later than 30 days after the
purchase of any such obligation. Unless otherwise specified in writing by the
Owner Trustee, all such Permitted Investments shall mature not later than 30
days from the date of purchase.
Permitted Lien: a Lien permitted under ss. 8 of the Lease.
Permitted Sublessee: any Permitted Air Carrier; or any airframe or
engine manufacturer, or Affiliate of such a manufacturer, which is domiciled in
the United States of America or, after the end of the Recovery Period (or before
that date, if the Lessee prepays in a lump sum any indemnity required under the
Tax Indemnity Agreement as a result of a sublease to such foreign manufacturer)
domiciled in a country listed on Exhibit E-2 to the Lease, or in any other
country to which the Owner Participant gives its prior written consent (which
shall not be unreasonably withheld or delayed).
Person: any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Placement Agent: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
Placement Agreement: the Placement Agreement dated September 19, 1997 among the Lessee and the Placement
--------------------
Agent.
Prepayment Date has the meaning specified in ss. 6.02(b) of the
Indenture.
Prepayment Price has the meaning specified in ss. 6.02(b) of the
Indenture.
Principal Amount: with respect to a Certificate means the stated original principal amount of such
Certificate and, with respect to all Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property: any right or interest in or to property of any kind whatsoever, whether real, personal or
mixed and whether tangible or intangible.
Purchase Agreement: the Purchase Agreement (No. RJ 350), dated as of January 8, 1997, between the
Manufacturer and the Lessee, including all exhibits, appendices and letter agreements, but only to the extent
that the foregoing relate to the Aircraft and to the extent assigned pursuant to the Purchase Agreement
Assignment.
Purchase Agreement Assignment: the Purchase Agreement Assignment (Atlantic Coast Airlines Trust No.
__________), dated as of the Delivery Date between the Lessor and the Lessee in substantially the form of Exhibit
E of the Participation Agreement, as such form may be amended on or prior to the Delivery Date; provided that no
such amendment shall materially adversely affect the interests of the Holders of the Certificates.
Purchase Price: the Lessor's Cost as set forth on Exhibit B to the Lease.
Rating Agencies: collectively, at any time, each nationally recognized
rating agency which shall have been requested to rate the Pass-Through
Certificates and which shall then be rating the Pass-Through Certificates. The
initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation: with respect to any Operative Agreement
that is to be modified in any material respect on the Delivery Date or the
Transfer Date, if applicable, a written confirmation from each of the Rating
Agencies that the use of such Operative Agreement with such modifications would
not result in (i) a reduction of the rating for any Class of Pass Through
Certificates below the then current rating for such Class of Pass Through
Certificates or (ii) a withdrawal or suspension of the rating of any Class of
Pass Through Certificates.
Record Date: with respect to Payment Dates under the Indenture (except
a date for payment of defaulted interest), December 15 for January 1 Payment
Dates and June 15 for July 1 Payment Dates, whether or not such date is a
Business Day.
Recourse Amount has the meaning specified in ss. 17.10 of the
Participation Agreement.
Recovery Period: the period prior to the end of the Owner Participant's taxable year which includes the
seventh anniversary of the Delivery Date.
Refinancing: a non-recourse loan to the Lessor arranged pursuant to ss. 15.01 of the Participation
Agreement.
Register has the meaning set forth in ss. 3.02 of the Indenture.
Registrar has the meaning set forth in ss. 3.02 of the Indenture.
Regulation D: Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
Related Indentures: collectively, (i) the Trust Indenture and Security
Agreement for each of Atlantic Coast Airlines Trust Nos. _______, _________,
________, _________, and ________, each dated as of September 26, 1997, between
the Owner Trustee and the Indenture Trustee, (ii) the Trust Indenture and
Security Agreement for each of Atlantic Coast Airlines Trust Nos. N306UE,
N310UE, N311UE, and N314UE, each dated as of September 26, 1997, between the
Owner Trustee and the Indenture Trustee, each with respect to a Jetstream J-41
aircraft, and (iii) the Trust Indenture and Security Agreement dated as of
September 26, 1997 between Atlantic Coast Airlines and the Indenture Trustee.
Related Leases: the other lease agreements between the Lessor (acting as Owner Trustee for the benefit
of the Owner Participant) and the Lessee, each with respect to a Canadair Regional Jet Series 200ER aircraft.
Remaining Weighted Average Life: on a given date with respect to any
Certificate the number of days equal to the quotient obtained by dividing (i)
the sum of each of the products obtained by multiplying (a) the amount of each
then remaining scheduled payment of principal of such Certificate by (b) the
number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Removable Improvements has the meaning set forth in ss. 9(e) of the
Lease.
Renewal Rent: the amount payable by the Lessee as rent in accordance with ss. 3(h) of the Lease during any
Renewal Term.
Renewal Term: one or more terms with respect to which the Lessee has exercised its option to renew the
Lease pursuant to ss. 3(h) thereof.
Rent: all payments due from the Lessee under the Lease as Basic Rent, Renewal Rent, and Supplemental
Rent, collectively.
Rent Payment Date: each Payment Date during the Term.
Reoptimization Date has the meaning specified in ss. 15.02(a) of the
Participation Agreement.
Replacement Aircraft: any aircraft substituted for the Aircraft pursuant to ss. 11(a)(1) of the Lease.
Replacement Airframe: has the meaning set forth in ss. 11(a)(1) of the Lease.
Replacement Engine: a General Electric CF34-3B1 engine (or an engine of
the same or another manufacturer) of equal or greater value, airworthiness,
remaining useful life and utility as the Engine being replaced (determined
without regard to hours or cycles remaining until the next scheduled overhaul,
but assuming that the Engine replaced was in the condition required by the
Lease), together with all Parts relating to such engine, which is substituted
for an Engine pursuant to the terms of the Lease; provided, however, that if
such replacement engine is not a General Electric CF34-3B1 engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Canadair Regional Jet Series 200ER airframes; and provided further,
that the Engines subject to the Lease at any given time shall be of the same
make and model.
Replacement Parts has the meaning set forth in ss. 9(d) of the Lease.
Responsible Officer: with respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in ss. 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
RVG: the Residual Agreement, dated as of the Delivery Date, between the Manufacturer and the Lessor,
pertaining to the Aircraft.
S&P: Standard & Poor's Ratings Group.
Scheduled Delivery Date: the Delivery Date specified in the Delivery Notice pursuant to ss. 3.01 of the
Participation Agreement.
SDIQ: Societe de Developpment Industriel du Quebec, a Quebec corporation.
SEC: the Securities and Exchange Commission of the United States and any successor agencies or
authorities.
Section 1110 Person: a Citizen of the United States who is an air carrier holding a valid air carrier
operating certificate issued pursuant to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more
individuals.
Secured Obligations has the meaning specified in the Granting Clause of
the Indenture.
Securities Act: the Securities Act of 1933, as amended.
Seller: [Bombardier Capital Inc./First Security Bank, National Association] [the Manufacturer].
Series "A" or "Series A Certificates": Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
Series "B" or "Series B Certificates": Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
Series "C" or "Series C Certificates": Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
Series "D" or "Series D Certificates": Certificates issued and
designated as "Series D" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
Sinking Fund Redemption Date has the meaning specified in ss. 6.06 of
the Indenture.
Sinking Fund Redemption Price has the meaning specified in ss. 6.06 of
the Indenture.
SLV Determination Date has the meaning set forth in ss. 11(a)(2) of the
Lease.
Special Aviation Counsel: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.
Specified Default: (a) an event or condition described in ss. 14(a), (b), (h), or (i) of the Lease that,
after the giving of notice or lapse of time, or both, would mature into an Event of Default, or (b) an Event of
Default.
Specified Investments: (a) direct obligations of the United States of
America or obligations fully guaranteed by the United States of America; (b)
commercial paper rated A-1/P-1 by S&P and Moody's, respectively or, if such
ratings are unavailable, rated by any nationally recognized rating organization
in the United States equal to the highest rating assigned by such rating
organization; (c) investments in negotiable certificates of deposit, time
deposits, banker's acceptances, commercial paper or other direct obligations of,
or obligations guaranteed by, commercial banks organized under the laws of the
United States or of any political subdivision thereof (or any U.S. branch of a
foreign bank) with issuer ratings of at least B/C by Thomson Bankwatch, having
maturities no later than 90 days following the date of such investment; (d)
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers; or (e) overnight repurchase agreements with
respect to the securities described in clause (a) above entered into with an
office of a bank or trust company which is located in the United States of
America or any bank or trust company which is organized under the laws of the
United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
SSB: State Street Bank and Trust Company of Connecticut, National Association, a national banking
association.
Stipulated Loss Value: (1) as of any Stipulated Loss Value Date during
the Basic Term, the amount determined as set forth in Exhibit C to the Lease for
that Payment Date, and (2) during any Renewal Term, the amount for the date
involved, determined in accordance with ss. 3(h) of the Lease.
Stipulated Loss Value Date: for any month, the day in such month specified in Exhibit C to the Lease or,
if such day is not a Business Day, the immediately succeeding Business Day.
Sublease: any sublease agreement covering any Item(s) between the Lessee and a Permitted Sublessee.
Sublessee: a Permitted Sublessee under a Sublease in effect at the time in question.
Subordination Agent: The First National Bank of Maryland, a national banking association, not in its
individual capacity but solely as Subordination Agent.
Supplemental Rent: (a) all amounts, liabilities, indemnities and
obligations (other than Basic Rent or Renewal Rent) which the Lessee assumes or
agrees to pay under the Lease or under the Participation Agreement or Tax
Indemnity Agreement or any other Operative Agreement to the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price, and amounts calculated by reference to Termination Value, any
amounts of Make-Whole Premium payable under the Indenture (other than any
Make-Whole Premium payable as a result of an Indenture Event of Default that is
not a Lessee Event of Default, and all amounts required to be paid by Lessee
under the agreements, covenants, and indemnities contained in the Lease or in
the Participation Agreement or the Tax Indemnity Agreement or any other
Operative Agreement, but excluding Basic Rent and Renewal Rent, and (b) all
amounts that the Owner Trustee is obligated to pay in accordance with clause (b)
of the last paragraph of ss. 2.04 of the Indenture.
Tax or Taxes has the meaning set forth in ss. 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement: the Tax Indemnity Agreement (Atlantic Coast Airlines Trust No. ______), dated
as of the Delivery Date or the Transfer Date, between the Lessee and the Owner Participant.
Term: the Basic Term of the lease for the Aircraft under the Lease and, if renewed pursuant to ss. 3(h) of
the Lease, each Renewal Term for the Aircraft for which the Lease is renewed.
Termination Date: the date of termination of the Lease as specified by the Lessee in its notice given
pursuant to ss. 3(g) thereof.
Termination Value: as of any Payment Date, the amount determined as set
forth in Exhibit D to the Lease for that Payment Date, adjusted as required by
ss. 3(d) of the Lease. Notwithstanding any other provisions of the Lease or the
Participation Agreement or the Indenture, each Termination Value for the
Aircraft shall be, under any circumstances and in any event, an amount, together
with Basic Rent due and owing through the date of payment of Termination Value,
at least sufficient to pay in full as of such date of payment the aggregate
unpaid principal amount of and accrued interest on the Certificates outstanding
on such date of payment (assuming that principal and interest payments with
respect to the Certificates have been paid when due).
Termination Value Date: for any month, the day in such month specified in Exhibit D to the Lease or, if
such day is not a Business Day, the immediately succeeding Business Day.
Transaction Costs: those costs and expenses set forth in ss. 10.01(a) of the Participation Agreement to be
borne by the Owner Participant.
Transfer Date: has the meaning set forth in Section 2.02(b) of the Participation Agreement.
Transportation Code: Title 49 of the United States Code, subtitle VII,
as amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield: at the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent H.15
(519), such weekly average yield to maturity as published in such H.15(919).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Premium will be the
third Business Day prior to the applicable prepayment date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable prepayment date.
Trust Agreement: the Trust Agreement (Atlantic Coast Airlines Trust No. __________), dated as of
September 1, 1997, between the Initial Owner Participant and the Owner Trustee in its individual capacity.
Trust Estate: the Lessor's Estate.
Trust Indenture Act: the Trust Indenture Act of 1939, as amended.
Trust Indenture Estate: all estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
United States, U.S., or US: the United States of America.
U.S. Person: a Person described in ss. 7701(a)(30) of the Code.
Warranty ▇▇▇▇ of Sale: the full warranty ▇▇▇▇ of sale covering the
Aircraft (and specifically referring to each Engine) executed by the Seller as
owner of the Aircraft in favor of the Owner Trustee and to be dated the Delivery
Date.
iv
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TRUST INDENTURE AND SECURITY AGREEMENT
(Atlantic Coast Airlines Trust No. ____)
dated as of September 26, 1997
between
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity, but solely as trustee,
Owner Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity, but solely as trustee,
Indenture Trustee
COVERING ONE CANADAIR REGIONAL JET, SERIES 200ER AIRCRAFT
SERIAL NO. _____, REGISTRATION NO. __________
-------------------------------------------------------------------------------------------------------------------
iv
TABLE OF CONTENTS
Page
Initial Recitals
Granting Clause
HABENDUM CLAUSE...................................................................................................5
ARTICLE I - DEFINITIONS...........................................................................................7
Section 1.01. Definitions.........................................................................................7
ARTICLE II - ISSUE, EXECUTION, FORM AND REGISTRATION OF CERTIFICATES; COLLATERAL ACCOUNT..........................7
Section 2.01. Authentication and Delivery of Certificates.........................................................7
Section 2.02. Execution of Certificates...........................................................................7
Section 2.03. Certificate of Authentication.......................................................................7
Section 2.04. Form and Terms of Certificates; Payments on Certificates............................................8
Section 2.05. Payments from Trust Indenture Estate Only..........................................................10
Section 2.06. Registration. Transfer and Exchange................................................................10
Section 2.07. Mutilated. Defaced, Destroyed, Lost and Stolen Certificates........................................11
Section 2.08. Cancellation of Certificates: Destruction Thereof..................................................12
Section 2.09. Temporary Certificates.............................................................................12
Section 2.10. Termination of Interest in Trust Indenture Estate..................................................13
Section 2.11. Certificates in Respect of Replacement Aircraft....................................................13
Section 2.12. Assumption of Obligations Under Certificates and Other Operative Agreements........................13
Section 2.13. Establishment of Collateral Account................................................................13
Section 2.14. Investment of Funds on Deposit in the Collateral Account...........................................14
Section 2.15. Release of Collateral Account on Delivery Date or Assumption of Certificates.......................14
Section 2.16. Cut-Off Date.......................................................................................15
Section 2.17. Subordination......................................................................................15
Section 2.18. Reoptimization.....................................................................................16
ARTICLE III - COVENANTS..........................................................................................16
Section 3.01. Payment of Principal. Make-Whole Premium and Interest..............................................16
Section 3.02. Offices for Payments, etc..........................................................................16
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee.......................................16
Section 3.04. Paying Agents......................................................................................16
Section 3.05. Covenants of SSB and the Owner Trustee.............................................................17
Section 3.06. [Reserved].........................................................................................17
Section 3.07. Disposal of Trust Indenture Estate.................................................................18
Section 3.08. No Representations or Warranties as to Aircraft or Documents.......................................18
Section 3.09. Further Assurances: Financing Statements...........................................................18
ARTICLE IV - HOLDER LISTS........................................................................................18
Section 4.01. Holder Lists: Ownership of Certificates............................................................18
ARTICLE V - RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE......................19
Section 5.01. Basic Rent Distribution............................................................................19
Section 5.02. Event of Loss and Replacement; Prepayment..........................................................20
Section 5.03. Payment After Indenture Event of Default. etc......................................................21
Section 5.04. Certain Payments...................................................................................23
Section 5.05. Other Payments.....................................................................................23
Section 5.06. Payments to Owner Trustee..........................................................................23
Section 5.07. Application of Payments............................................................................23
Section 5.08. Investment of Amounts Held by Indenture Trustee....................................................24
Section 5.09. Withholding Taxes..................................................................................25
Section 5.10. Letter of Credit...................................................................................25
ARTICLE VI - PREPAYMENT OF CERTIFICATES..........................................................................25
Section 6.01. No Prepayment Except as Specified..................................................................25
Section 6.02. Prepayment of Certificates.........................................................................25
Section 6.03. Notice of Prepayment to Holders....................................................................27
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption Price......................................27
Section 6.05. Certificates Payable on Prepayment Date............................................................28
Section 6.06. Mandatory Sinking Fund Redemption..................................................................28
ARTICLE VI - INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE AND HOLDERS..............................28
Section 7.01. Indenture Event of Default.........................................................................28
Section 7.02. Remedies...........................................................................................30
Section 7.03. Return of Aircraft. etc............................................................................32
Section 7.04. Indenture Trustee May Prove Debt...................................................................34
Section 7.05. Remedies Cumulative................................................................................35
Section 7.06. Suits for Enforcement..............................................................................35
Section 7.07 Discontinuance of Proceedings.......................................................................36
Section 7.08. Limitations on Suits by Holders....................................................................36
Section 7.09. Unconditional Right of Holders to Payments on Certificates.........................................36
Section 7.10. Control by Holders.................................................................................36
Section 7.11. Waiver of Past Indenture Default...................................................................37
Section 7.12. Notice of Indenture Default........................................................................37
ARTICLE VIII - RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT............................................38
Section 8.01. Certain Rights of Owner Trustee and Owner Participant..............................................38
Section 8.02. Owner Participant's Right to Prepay or Purchase the Certificates...................................40
Section 8.03. Certain Rights of Owner Participant................................................................41
ARTICLE IX - CONCERNING THE INDENTURE TRUSTEE....................................................................43
Section 9.01. Acceptance of Trusts...............................................................................43
Section 9.02 Duties Before; and During, Existence of Indenture Event of Default.................................43
Section 9.03. Certain Rights of the Indenture Trustee............................................................44
Section 9.04. Indenture Trustee Not Responsible for Recitals, Certificates or Proceeds...........................45
Section 9.05. Indenture Trustee and Agents May Hold Certificates; Collections, etc...............................46
Section 9.06. Moneys Held by Indenture Trustee...................................................................46
Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate, etc...................................46
Section 9.08. Replacement Airframes and Replacement Engines......................................................46
Section 9.09 Indenture Supplement for Replacements...............................................................49
Section 9.10. Effect of Replacement..............................................................................49
Section 9.11. Compensation.......................................................................................49
ARTICLE X - CONCERNING THE HOLDERS...............................................................................49
Section 10.01. Evidence of Action Taken by Holders...............................................................49
Section 10.02. Proof of Execution of Instruments and of Holding of Certificates..................................50
Section 10.03. Holders to Be Treated as Owners...................................................................50
Section 10.04. Certificates Owned by Owner Trustee or Lessee Deemed Not Outstanding..............................50
Section 10.05. Right of Revocation of Action Taken...............................................................51
Section 10.06. ERISA.............................................................................................51
ARTICLE XI - INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE...............................................51
ARTICLE XII - SUCCESSOR TRUSTEES.................................................................................52
Section 12.01. Notice of Successor Owner Trustee.................................................................52
Section 12.02. Resignation and Removal of Indenture Trustee: Appointment of Successor............................52
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.............................................53
Section 12.04. Acceptance of Appointment by Successor Trustee....................................................54
Section 12.05. Merger, Consolidation or Succession to Business of Indenture Trustee..............................54
Section 12.06. Appointment of Separate Trustees..................................................................55
ARTICLE XIII - SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS...........................56
Section 13.01. Supplemental Indentures Without Consent of Holders................................................56
Section 13.02. Supplemental Indentures With Consent of Holders...................................................58
Section 13.03. Effect of Supplemental Indenture..................................................................59
Section 13.04. Documents to Be Given to Indenture Trustee........................................................59
Section 13.05. Notation on Certificates in Respect of Supplemental Indentures....................................59
Section 13.06. No Request Necessary for Lease Supplement or Indenture Supplement.................................59
Section 13.07. Notices to Liquidity Providers....................................................................59
ARTICLE XIV - SATISFACTION AND DISCHARGE OF INDENTURE;UNCLAIMED MONEYS...........................................60
Section 14.01. Satisfaction and Discharge of Indenture: Termination of Indenture.................................60
Section 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates...................61
Section 14.03. Repayment of Moneys Held by Paying Agent..........................................................61
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee and Paying Agent............................61
ARTICLE XV - MISCELLANEOUS.......................................................................................61
Section 15.01. Capacity in Which Acting..........................................................................61
Section 15.02. No Legal Title to Trust Indenture Estate in Holders...............................................61
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is Binding....................................62
Section 15.04. Indenture Benefits Trustees, Participants, Lessee, and Liquidity Providers Only...................62
Section 15.05. No Action Contrary to Lessee's Rights Under the Lease.............................................62
Section 15.06. Notices...........................................................................................62
Section 15.07. Officer's Certificates and Opinions of Counsel....................................................62
Section 15.08. Severability......................................................................................63
Section 15.09. No Oral Modifications or Continuing Waivers.......................................................63
Section 15.10. Successors and Assigns............................................................................63
Section 15.11. Headings..........................................................................................63
Section 15.12. Normal Commercial Relations.......................................................................63
Section 15.13. Governing Law; Counterparts.......................................................................64
Exhibit A -- Form of Indenture and Security Agreement Supplement
Exhibit B -- Form of Certificate
Schedule I -- Definitions
Schedule II -- Amortization Schedule
66
TRUST INDENTURE AND SECURITY AGREEMENT
(ATLANTIC COAST AIRLINES TRUST NO. )
TRUST INDENTURE AND SECURITY AGREEMENT (ATLANTIC COAST AIRLINES
TRUST NO. _________) dated as of September 26, 1997 (the "Indenture"), between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise specifically set forth herein (when acting in such individual
capacity, "SSB"), but solely as owner trustee (the "Owner Trustee") under the
Trust Agreement, as defined herein, and THE FIRST NATIONAL BANK OF MARYLAND, a
national banking association (when acting in its individual capacity, "FNBM"),
as Indenture Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Initial Owner Participant and SSB have, prior to the
execution and delivery of this Indenture, entered into a Trust Agreement
(Atlantic Coast Airlines Trust No. ___________) dated as of September 26, 1997,
(as amended or otherwise modified from time to time in accordance with the
provisions thereof and of the Participation Agreement, the "Trust Agreement"),
whereby, among other things, SSB has declared a certain trust for the use and
benefit of the Initial Owner Participant, subject, however, to the Lien of this
Indenture for the use and benefit of, and with the priority of payment to, the
holders of the Certificates issued hereunder, and the Owner Trustee is
authorized and 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 of Certificates 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 Trust Indenture Estate hereunder of the Owner Trustee's right, title and
interest in the Liquid Collateral and after the Delivery Date for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder, of among other things, certain
of the Owner Trustee's estate, right, title and interest in and to the Aircraft
and the Indenture Documents and certain payments and other amounts (other than
Excepted Payments) received hereunder or thereunder in accordance with the terms
hereof, as security for, among other things, the Owner Trustee's obligations to
the Certificate Holders and for the benefit and security of such Holders;
WHEREAS, all things have been done to make the Certificates, 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, enforceable in accordance with its
terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to, all
the Certificates from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the Owner
Trustee of all the agreements, covenants and provisions in this Indenture, in
the Certificates, in the Participation Agreement and in the Lease contained for
the benefit of the Holders of the Certificates, and the prompt payment of any
and all amounts from time to time owing under the Participation Agreement by the
Owner Trustee, any Owner Participant or the Lessee to the Holders (collectively
the "Secured Obligations") and for the uses and purposes and subject to the
terms and provisions of this Indenture, and in consideration of the premises and
of the covenants in this Indenture and in the Certificates and of the purchase
of the Certificates by their Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which are hereby acknowledged, the Owner Trustee
has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged, granted a first priority security interest in and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
grant a first priority security interest in and confirm to the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable security
and benefit of the Holders from time to time of the Certificates, a first
priority security interest in and first mortgage Lien on all estate, right,
title and interest of the Owner Trustee in, to and under the following described
property, rights and privileges other than Excepted Payments, which
collectively, excluding Excepted Payments but including all property
specifically subjected to the Lien of this Indenture by the terms hereof, by any
supplement to this Indenture (including the Indenture Supplement) or any
mortgage supplemental to this Indenture, are included within the Trust Indenture
Estate, subject always to the rights granted to the Owner Trustee or any Owner
Participant hereunder and to the other terms and conditions of this Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any election
or option or to give or receive 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;
(3) The Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the PAA Consent, the
Engine Manufacturer's Consent, the FAA ▇▇▇▇ of Sale, the Warranty ▇▇▇▇ of Sale,
and the Participation Agreement (to the extent of amounts payable to the Owner
Trustee thereunder) (collectively, and together with the Lease, the Trust
Agreement, and the Certificates, the "Indenture Documents"), including all
rights of the Owner Trustee to execute any election or option or to give or
receive any notice, consent, waiver or approval under or in respect of any of
the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and other
income (including sales proceeds) of the property subjected or required to be
subjected to the Lien of this Indenture, and all of the estate, right, title and
interest of the Owner Trustee in and to the same and every part of said
property;
(5) The Collateral Account, the Liquid Collateral and all other moneys
and securities (including Permitted Investments) now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture Trustee
by or for the account of the Owner Trustee pursuant to any term of any Operative
Agreement, except the Tax Indemnity Agreement, and held or required to be held
by the Indenture Trustee hereunder;
(6) All requisition proceeds with respect to the Aircraft or any part
thereof (to the extent of the Owner Trustee's interest therein pursuant to the
terms of the Lease) and all insurance proceeds with respect to the Aircraft or
any part thereof from insurance required to be maintained by the Lessee under
Section 12 of the Lease, but excluding any insurance maintained by the Lessee
and not required under Section 12 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and security
interest of this Indenture and from the Trust Indenture Estate, (i) all Excepted
Payments, including without limitation all right, title and interest of any
Owner Participant in, to and under the Tax Indemnity Agreement and any moneys
due or to become due under the Tax Indemnity Agreement and all rights to collect
and enforce Excepted Payments and (ii) rights granted to or retained by the
Owner Trustee or any Owner Participant hereunder and SUBJECT TO the following
provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and any Owner Participant shall at all times
retain the right, to the exclusion of the Indenture Trustee: (A) to Excepted
Payments and to commence an action at law to obtain or otherwise demand, ▇▇▇ for
or receive and enforce the payment of such Excepted Payments, (B) to exercise
any election or option or make any decision or determination or to give or
receive any notice (including notice of Default), consent, waiver or approval in
respect of any such Excepted Payment, (C) to adjust (and make any decision or
determination or give any notice or consent with respect to) Basic Rent and the
percentages relating to Stipulated Loss Value and Termination Value and the EBO
Price, and the EBO Date, as provided in Section 3(d) of the Lease and Section
15.01 of the Participation Agreement, (D) to exercise any election or option to
make any decision or determination, or to give or receive any notice, consent,
waiver or approval, or to take any other action in respect of, but in each case
only to the extent relating to, Excepted Payments (except for, in respect of any
portion of Basic Rent constituting an Excepted Payment, any action changing the
manner by which such Basic Rent is to be paid), (E) to retain the rights of the
"Lessor" with respect to solicitations of bids, and the election to retain the
Aircraft pursuant to Section 3(g) of the Lease, (F) to retain the right of
"Lessor" to determine the Fair Market Rental or Fair Market Value pursuant to
the respective definitions thereof, (G) to exercise all other rights of the
Lessor under Sections 3(h) and 16 of the Lease with respect to the retention or
purchase by the Lessee or the Lessor of the Aircraft or the exercise by the
Lessee of the Lessee's renewal or purchase options, (H) to retain all rights
with respect to insurance maintained for its own account which Section 12(e) of
the Lease specifically confers on the "Owner Participant", (I) to approve
appraisers, lawyers and other professionals and receive notices, certificates,
reports, filings, opinions and other documents, in each case with respect to
matters relating to the Owner Participant's tax position, (J) to approve any
accountants to be used in the verification of any Rent adjustment, (K) to
exercise, to the extent necessary to enable it to exercise its rights under
Section 8.03 hereof, the rights of the "Lessor" under Section 19 of the Lease,
and (L) to consent to changes to the list of countries on Exhibit E of the
Lease, and to Permitted Air Carriers and Permitted Sublessees;
(ii) whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have the
rights separately but not to the exclusion of the other: (A) to receive from the
Lessee all notices, certificates, reports, filings, opinions of counsel, copies
of all documents and all information which the Lessee is permitted or required
to give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 10 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 12(e) of the Lease and to retain all rights with respect to such
insurance maintained for its own account, and (D) to give any notice of default
under Section 14 of the Lease;
(iii) subject to the last sentence of this clause (a), (A) so long as
no Indenture Event of Default not constituting an Event of Default shall have
occurred and be continuing (but subject to the provisions of Section 8.01
hereof), the Owner Trustee shall retain the right, to the exclusion of the
Indenture Trustee (or, if an Indenture Event of Default that is also an Event of
Default shall have occurred and be continuing, acting jointly with and not to
the exclusion of the Indenture Trustee), to exercise all rights, elections and
options of the Lessor in connection with the return of the Aircraft under
Section 5 of the Lease (but not Section 15 thereof, it being understood that the
Indenture Trustee shall have the exclusive right to exercise remedies pursuant
to such Section 15, including in respect of any related return of the Aircraft
pursuant to Section 5 of the Lease), including the right to approve as
satisfactory any accountants, engineers, appraisers or counsel to render
services for or issue appraisals, reports, certificates or opinions to the Owner
Trustee and to exercise all rights, elections and options of the Lessor in
connection with the return of the Aircraft pursuant to the express provisions of
the Operative Agreements, and (B) so long as no Indenture Event of Default not
constituting an Event of Default shall have occurred and be continuing (but
subject to the provisions of Section 8.01 hereof), the Owner Trustee shall
retain the right, jointly with the Indenture Trustee (agreement of both not
being required), to further assurances and financial information from the Lessee
pursuant to Section 20 of the Lease (other than the right to receive any funds
to be delivered to the "Lessor" under the Lease (except funds delivered with
respect to Excepted Payments);
(iv) subject to the last sentence of this clause (a), at all times the
Owner Trustee shall have the right as Lessor, but not to the exclusion of the
Indenture Trustee, 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
(v) at all times the Owner Trustee and any Owner Participant shall have
the rights granted to them under Articles VI, VIII and X and Section 7.02
hereof.
Notwithstanding the foregoing, but subject always to the provisions of
Section 15.05 hereof, the Indenture Trustee shall at all times have the right,
to the exclusion of the Owner Trustee and any Owner Participant, to (A) (other
than with respect to Excepted Payments) declare the Lease to be in default under
Section 15 thereof or any statute (including, without limitation, Article 2A of
the Uniform Commercial Code) and (B) subject only to the provisions of this
Indenture (other than in connection with Excepted Payments), exercise the
remedies set forth in such Section 15 of the Lease, in any statute (including
without limitation Article 2A of the Uniform Commercial Code), at law and in
Article 7 hereof.
(b) The leasehold interest granted to the Lessee by the Lease shall not
be subject to the security interest granted by this Indenture, and nothing in
this Indenture shall affect the rights of the Lessee under the Lease so long as
no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, in trust for the equal and ratable benefit and
security of the Holders from time to time of the Certificates, without any
priority of any one Certificate over any other and for the uses and purposes and
subject to the terms and conditions set forth in this Indenture and the rights
of the Owner Trustee and the Owner Participant under this Indenture.
It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any of
those documents, all in accordance with and pursuant to the terms and provisions
of those documents, and the Indenture Trustee and the Holders of the
Certificates shall have no obligation or liability under the Indenture Documents
by reason of or arising out of the assignment under this Indenture, nor shall
the Indenture Trustee or the Holders of the Certificates be required or
obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, 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.
Effective upon the occurrence and continuance of an Indenture Event of
Default, the Owner Trustee hereby constitutes the Indenture Trustee the true and
lawful attorney of the Owner Trustee, irrevocably, with full power (in the name
of the Owner Trustee or otherwise), subject to the terms and conditions of this
Indenture, to ask, require, demand, receive, compound and give acquittance for
any and all Basic Rent, Supplemental Rent payable to the Owner Trustee,
Stipulated Loss Value and Termination Value payments, insurance proceeds and any
and all moneys and claims for moneys due and to become due under or arising out
of the Lease (subject to Section 8.01 hereof) or the other Indenture Documents
(other than Excepted Payments), to endorse any checks or other instruments or
orders in connection with the same and to file any claims, take any action or
institute any proceeding which the Indenture Trustee may deem to be necessary or
advisable in the premises.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments not constituting Basic Rent) payable to the Owner
Trustee and all other amounts (other than Excepted Payments not constituting
Basic Rent) which are required to be paid to or deposited with the Owner Trustee
pursuant to the Lease directly to the Indenture Trustee at such address in the
United States of America as the Indenture Trustee shall specify for application
as provided in this Indenture. The Owner Trustee agrees that if, notwithstanding
such provision, it shall have received any such amounts, promptly on receipt of
any such payment, it will transfer to the Indenture Trustee any and all moneys
from time to time received by the Owner Trustee constituting part of the Trust
Indenture Estate for distribution by the Indenture Trustee pursuant to this
Indenture, except that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement (i) any amounts distributed to it by the Indenture
Trustee under this Indenture, and (ii) any Excepted Payments not constituting
Basic Rent.
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, at the
expense of the Lessee, promptly and duly execute and deliver or cause to be duly
executed and delivered any and all such further instruments and documents as the
Indenture Trustee may reasonably deem desirable in obtaining the full benefits
of the assignment hereunder and of the rights and powers herein granted;
provided, however, that the Owner Trustee shall have no obligation to execute
and deliver or cause to be executed or delivered to the Indenture Trustee any
such instrument or document if such execution and delivery would result in the
imposition of additional liabilities on the Owner Trustee or any Owner
Participant or would result in a burden on such Owner Participant's business
activities, unless the Owner Trustee or such Owner Participant, as the case may
be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant to
Section 14.01 hereof, any of its right, title or interest hereby assigned, to
anyone other than the Indenture Trustee, and that it will not, except in respect
of Excepted Payments or otherwise as provided in or permitted by this Indenture,
enter into an agreement amending or supplementing any of the Indenture
Documents, settle or compromise any claim (other than claims in respect of
Excepted Payments) against the Lessee arising under any of the Indenture
Documents, or 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.
Concurrently with the delivery of this Indenture, the Owner Trustee has
delivered to the Indenture Trustee executed counterparts of the Trust Agreement.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in Schedule
I hereto for all purposes of this Indenture and shall be equally applicable to
both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES;
COLLATERAL ACCOUNT
Section 2.01. Authentication and Delivery of Certificates. Forthwith
upon the execution and delivery of this Indenture, and from time to time
thereafter, Certificates in an aggregate principal amount not in excess of the
amount specified in Section 2.04 hereof (except as otherwise provided in
Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture Trustee
shall thereupon authenticate and deliver said Certificates to or upon the oral
or written order of the Owner Trustee, signed, if written, by an authorized
officer of the Owner Trustee, without any further action by the Owner Trustee.
Section 2.02. Execution of Certificates. The Certificates shall be
signed on behalf of the Owner Trustee by an authorized officer of SSB. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect the
validity or enforceability of any Certificate which has been duly authenticated
and delivered by the Indenture Trustee.
In case any officer of SSB who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of by
SSB, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of SSB; and any Certificate may be signed on behalf of the Owner
Trustee by such person or persons as, at the actual date of the execution of
such Certificate, shall be the proper officers of SSB, although at the date of
the execution and delivery of this Indenture any such person was not such an
officer. Certificates bearing the facsimile signatures of individuals who were
authorized officers of SSB at the time such Certificates were issued 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
Certificates or did not hold such offices at the respective dates of such
Certificates.
Section 2.03. Certificate of Authentication. Only such Certificates as
shall bear thereon a certificate of authentication substantially in the form set
forth in Exhibit B, executed by the Indenture Trustee by manual signature of one
of its authorized officers, shall be entitled to the security and benefits of
this Indenture or be valid or obligatory for any purpose. Such certificate by
the Indenture Trustee upon any Certificate executed by the Owner Trustee shall
be conclusive evidence that the Certificate so authenticated has been duly
authenticated and delivered hereunder and that the Holder, as evidenced on the
Register, is entitled to the security and benefits of this Indenture.
Section 2.04. Form and Terms of Certificates; Payments on Certificates.
The Certificates and the Indenture Trustee's certificate of authentication shall
be substantially in the form set forth in Exhibit B hereto. Certificates may
differ with respect to Maturity (subject to Section 15.01(d) of the
Participation Agreement) and as to other terms. The Certificates shall be
issuable as registered securities without coupons and shall be numbered,
lettered, or otherwise distinguished in such manner or in accordance with such
plans as the Owner Trustee executing the same may determine with the approval of
the Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Certificate Closing Date, shall be issued
in four separate series consisting of Series A, Series B, Series C, and Series D
and shall be issued in the Maturities and principal amounts, and shall bear
interest at the rates per annum, specified in the form of Certificate set forth
in Exhibit B.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Certificates are admitted to trading, or to conform to general usage.
Each Certificate shall bear interest from the date of original issuance
thereof or from the most recent date to which interest has been paid and duly
provided for, as the case may be, which shall be payable on the dates specified
on the face of the form of Certificate set forth in Exhibit B hereto until the
principal thereof is paid. Interest shall be calculated on the basis of a
360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Certificate, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Certificates shall be payable at the Corporate Trust Department of the Indenture
Trustee or at any office or agency maintained for such purpose pursuant to
Section 3.02 hereof in immediately available funds prior to 10:30 A.M. (New York
time) on the due date thereof and the Indenture Trustee shall remit all such
amounts received by it to the Holders at such account or accounts at such
financial institution or institutions as the Holders shall have designated to
the Indenture Trustee in writing, in immediately available funds, such payment
to be made if the payment was received prior to 10:30 A.M. New York time by the
Indenture Trustee on any Business Day, by 12:00 noon New York time on such
Business Day; otherwise, the Indenture Trustee shall make payment promptly, but
not later than 11:00 A.M. New York time on the next succeeding Business Day;
provided, however, that interest may be payable at the option of the Indenture
Trustee or its Paying Agent, as defined in Section 3.04, by mailing checks for
such interest payable to or upon the written order of the Holders entitled
thereto as they shall appear on the Register. If any amount payable under the
Certificates, or under this Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
The Holder at the close of business on any Record Date with respect to
any Payment Date shall be entitled to receive the interest if any payable on
such Payment Date notwithstanding any transfer or exchange of such Certificate
subsequent to the Record Date and prior to such Payment Date, except if and to
the extent the Owner Trustee shall default in the payment of the interest due on
such Payment Date, in which case such defaulted interest shall be paid to the
Holder at the close of business on a subsequent Record Date (which shall be not
less than five or more than 15 Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by or on behalf of
the Owner Trustee to the Holders not less than 15 days preceding such subsequent
Record Date.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 5.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by the Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Subordination Agent or
(iii) each Liquidity Provider, in each case pursuant to Article 8 or 9 of the
Participation Agreement (it being acknowledged that the Lessee has been
instructed to pay such amounts to the Person or Persons entitled thereto) and
(b) the Owner Trustee's pro rata share of all amounts owed to each Liquidity
Provider by the Subordination Agent under each Liquidity Facility other than
amounts due as (i) repayments of the principal of advances thereunder, and (ii)
interest on Interest Drawings and Final Drawings except to the extent included
in Net Interest and Related Charges. As used in this Section, the Owner
Trustee's pro rata share means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Certificates issued under
this Indenture other than the Series D Certificates and the denominator
of which is the aggregate principal balance of all Certificates issued
under this Indenture and the Related Indentures other than the Series D
Certificates, plus
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Certificate issued under
this Indenture a fraction, the numerator of which is the aggregate
principal balance then outstanding of Certificates issued under this
Indenture other than the Series D Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Certificates issued under this Indenture and the Related Indentures
other than the Series D Certificates under which there exists a Payment
Default or (y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Certificates plus (ii) any amounts payable under
Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each
Liquidity Facility (or similar provisions of any replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with a Certificate issued
hereunder or a Certificate issued under any Related Indenture means a default in
the payment of principal thereof or interest thereon (which default has not been
cured), other than solely because of acceleration.
Section 2.05. Payments from Trust Indenture Estate Only. All payments
to be made by the Owner Trustee under this Indenture shall be made only from the
income and the proceeds from the Lessor's Estate to the extent included in the
Trust Indenture Estate and from any other amounts of the type described in
Section 5.01 hereof (but only to the extent actually received by the Indenture
Trustee) and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate (and such other amounts) to enable the Indenture Trustee to
make distributions of the amounts due in respect of the Certificates in
accordance with the terms hereof and thereof. Each Holder by its acceptance of a
Certificate agrees that it will look solely to the income and proceeds from the
Trust Indenture Estate (and such other amounts of the type described in Section
5.01 hereof but only to the extent actually received by the Indenture Trustee)
to the extent available for distribution to it as provided herein and that
neither the Owner Participant, nor the Owner Trustee, nor SSB, nor the Indenture
Trustee is personally liable to such Holder for any amounts payable under this
Indenture or such Certificate or for any amounts payable or liability under any
Certificate or this Indenture, except as expressly provided herein in the case
of SSB, the Owner Trustee or the Indenture Trustee.
SSB is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates, except
as a result of SSB's gross negligence or willful misconduct, or as otherwise
expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of a
debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions any Owner Participant is required, by
reason of such Owner Participant being held to have recourse liability to the
debtor or the trustee of the debtor directly or indirectly, to make payment on
account of any amount payable as principal of or interest, Make-Whole Premium or
other amounts payable on the Certificates, and (3) the Indenture Trustee
actually receives any Recourse Amount which reflects any payment by an Owner
Participant on account of (2) above, then the Indenture Trustee shall promptly
refund to such Owner Participant such Recourse Amount. Nothing contained in this
paragraph shall prevent the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of any Owner
Participant under the Participation Agreement, or from retaining any amount paid
by any Owner Participant under Sections 5.01, 8.02 and 8.03 hereof.
Section 2.06. Registration. Transfer and Exchange. The Indenture
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may prescribe,
it will register, and will register the transfer of, Certificates as provided in
this Article. Such Register shall be in written form in the English language or
in any other form capable of being converted into such form within a reasonable
period of time.
Upon due presentation for registration of transfer of any Certificate
at any such office or agency, the Owner Trustee shall execute and the Indenture
Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Certificate or Certificates of the same Series and Maturity,
principal amount and interest rate and in authorized denominations for an equal
aggregate principal amount; provided, that such Certificate being transferred
shall be canceled in accordance with Section 2.08 hereof simultaneously with the
issuance of the new Certificate.
Any Certificate or Certificates may be exchanged for a Certificate or
Certificates of the same Series and Maturity and interest rate but in other
authorized denominations, in an equal aggregate principal amount. Certificates
to be exchanged shall be surrendered at any office or agency to be maintained by
the Indenture Trustee for the purpose as provided in Section 3.02 hereof, and
the Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Certificate or Certificates which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Certificates presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trustee
and the Indenture Trustee duly executed by the Holder or its attorney duly
authorized in writing and (except in the case of transfers pursuant to Article
15 of the Participation Agreement) the Indenture Trustee may require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act.
The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Certificates. No
service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or register a
transfer of any Certificates (a) for a period of 15 days immediately preceding
the first mailing of notice of prepayment of such Certificates or (b) with
respect to which notice of prepayment has been given pursuant to Section 6.03
hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of Certificates
shall be valid obligations of the Owner Trustee, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the
Certificates surrendered upon such transfer or exchange.
Section 2.07. Mutilated. Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner Trustee
in its discretion may execute, and upon the oral or written request of any
officer of SSB, principal amount and interest rate as the Certificate being
replaced, bearing a number not contemporaneously or previously outstanding, in
exchange and substitution for the mutilated or defaced Certificate, or in lieu
of and substitution for the Certificate so apparently destroyed, lost or stolen.
In the case of any Certificate so apparently destroyed, lost or stolen, the
applicant for a substitute Certificate shall furnish to the Owner Trustee and to
the Indenture Trustee such security or indemnity as may be required by them to
indemnify and defend and to hold each of them harmless and evidence to their
satisfaction of the apparent destruction, loss or theft of such Certificate and
of the ownership thereof.
Upon the issuance of any substitute Certificate, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Certificate which has matured or is about to mature, or has been called
for prepayment in full, shall become mutilated or defaced or be apparently
destroyed, lost or stolen, the Owner Trustee may, instead of issuing a
substitute Certificate, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Certificate), if
the applicant of any Certificate so apparently destroyed, lost or stolen, for
such payment shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as any of them may require to hold each of them
harmless and the applicant shall also furnish to the Owner Trustee and the
Indenture Trustee evidence to their satisfaction of the apparent destruction,
loss or theft of such Certificate and of the ownership thereof.
Every substitute Certificate issued pursuant to the provisions of this
Section by virtue of the fact that any Certificate is apparently destroyed, lost
or stolen shall constitute an original additional contractual obligation of the
Owner Trustee, whether or not the apparently destroyed, lost or stolen
Certificate shall be enforceable at any time by anyone and shall be entitled to
all the security and benefits of (but shall be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately with any and all
other Certificates duly authenticated and delivered hereunder. All Certificates
shall be held and owned upon the express condition that, to the extent permitted
by law, the foregoing provisions are exclusive with respect to the replacement
or payment of mutilated, defaced, or apparently destroyed, lost or stolen
Certificates and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.08. Cancellation of Certificates: Destruction Thereof. All
Certificates surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee
or the Indenture Trustee, shall be delivered to the Indenture Trustee for
cancellation or, if surrendered to the Indenture Trustee, shall be canceled by
it; and no Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Indenture Trustee
shall destroy cancelled Certificates held by it and deliver a certificate of
destruction to the Owner Trustee. If the Owner Trustee shall acquire any of the
Certificates, such acquisition shall not operate as a prepayment or satisfaction
of the indebtedness represented by such Certificates unless and until the same
are delivered to the Indenture Trustee for cancellation.
Section 2.09. Temporary Certificates. Pending the preparation of
definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of SSB, the Indenture Trustee shall authenticate
and deliver temporary Certificates (printed, lithographed, typewritten or
otherwise reproduced, in each case in form satisfactory to the Indenture
Trustee). Temporary Certificates shall be issuable as registered Certificates
without coupons, of any authorized denomination, and substantially in the form
of the definitive Certificates but with such omissions, insertions and
variations as may be appropriate for temporary Certificates, all as may be
determined by the Owner Trustee with the concurrence of the Indenture Trustee.
Temporary Certificates may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Certificate shall be executed
by the Owner Trustee and, upon the oral or written request of an authorized
officer of the Owner Trustee, be authenticated by the Indenture Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Certificates. Without unreasonable delay the Owner Trustee shall
execute and shall furnish definitive Certificates and thereupon temporary
Certificates shall be surrendered in exchange therefor without charge at any
office or agency to be maintained by the Indenture Trustee for the purpose
pursuant to Section 3.02 hereof, and, upon the oral or written request of an
authorized officer of the Owner Trustee, the Indenture Trustee shall
authenticate and deliver in exchange for such temporary Certificates an equal
aggregate principal amount of definitive Certificates of the same Series and
Maturities and interest rates and in authorized denominations. Until so
exchanged, temporary Certificates shall be entitled to the same security and
benefits under this Indenture as definitive Certificates.
Section 2.10. Termination of Interest in Trust Indenture Estate. A
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder and under the other Operative Agreements shall have been paid in full.
Section 2.11. Certificates in Respect of Replacement Aircraft. Upon the
execution and delivery of a supplement to this Indenture covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each
Certificate shall be deemed to have been issued in connection with such
Replacement Airframe and/or Replacement Engine and (in the case of a Replacement
Airframe) each Certificate issued thereafter upon a transfer or exchange of, or
as a replacement for, a Certificate, shall be designated as having been issued
in connection with such Replacement Airframe, but without any other change
therein except as provided for in this Article II.
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements. If, in accordance with and subject to the satisfaction of
the conditions set forth in Section 7.11 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder, under
the Certificates, and under all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the Certificates and all other Operative
Agreements (except for any recourse obligations of the Owner Participant or the
Owner Trustee in its individual capacity with respect to matters arising out of
events occurring prior to such assumption).
Section 2.13. Establishment of Collateral Account. (a) The Indenture
Trustee shall, pursuant to the Collateral Account Control Agreement, establish,
or cause to be established, with State Street Bank and Trust Company of
Connecticut, National Association, who shall represent and warrant that it is a
financial intermediary (as defined in Section 8-313(4) of the Connecticut
Uniform Commercial Code), in its name as secured party hereunder an Eligible
Deposit Account entitled "The First National Bank of Maryland, as secured party
under the Trust Indenture and Security Agreement (Atlantic Coast Airlines Trust
No. __________) dated as of September 26, 1997, with the Owner Trustee referred
to therein".
(b) If at any time the Collateral Account ceases to be an Eligible
Deposit Account, the Indenture Trustee shall within two Business Days, establish
a new Collateral Account meeting the conditions specified in the definition of
Eligible Deposit Account, and shall transfer any cash or any investments in the
Collateral Account to such new Collateral Account.
(c) The Indenture Trustee shall have exclusive dominion and control of
the Collateral Account and all funds therein, and shall make withdrawals from
the Collateral Account only in accordance with this Indenture.
(d) The Collateral Account Control Agreement shall require FNBM to send
confirmation to the Indenture Trustee and the Lessee that it has credited the
Specified Investments to the Collateral Account and to make appropriate entries
on its books identifying the Specified Investments as pledged to the Indenture
Trustee.
Section 2.14. Investment of Funds on Deposit in the Collateral Account.
(a) Funds deposited in the Collateral Account shall be invested and reinvested
by the Indenture Trustee, subject to Section 17.02 of the Participation
Agreement, at the risk of the Owner Trustee, in Specified Investments selected
by the Lessee and approved by the Indenture Trustee for the account of the Owner
Trustee in accordance with Section 2.14(b) below; provided, however, that if
Specified Investments meeting the requirements of Section 2.14(b) are not
available on any day on which funds are to be invested as contemplated by the
preceding provisions of this Section 2.14(a), the Indenture Trustee may leave
such funds in the Collateral Account uninvested until the earliest of (i) the
date on which an appropriate Specified Investment becomes available, (ii) the
Delivery Date and (iii) the Cut-Off Date. The Indenture Trustee shall maintain
possession of the negotiable instruments or securities, if any, evidencing such
Specified Investments and, in the case of any Specified Investments in
book-entry form, such Specified Investments shall be credited to an account of
the Indenture Trustee or a financial intermediary with the applicable Federal
Reserve Bank; provided, however, if the Specified Investments are credited to an
account of the financial intermediary, the financial intermediary shall make
written confirmation thereof to the Indenture Trustee and make an appropriate
entry on its books identifying the Specified Investments as pledged to the
Indenture Trustee. All proceeds of and any income, interest and other payments
and distributions on or with respect to any Specified Investments shall be
deposited in or credited to the Collateral Account and thereafter shall be held,
invested and applied by the Indenture Trustee in accordance with this Indenture.
The Indenture Trustee shall promptly notify the Owner Trustee and the Lessee of
any Losses.
(b) On the Certificate Closing Date, the Indenture Trustee shall invest
the amount deposited in the Collateral Account pursuant to Section 2.01(c) of
the Participation Agreement in Specified Investments selected by the Lessee and
approved by the Indenture Trustee for the account of the Owner Trustee which
mature on or prior to ___________, 199_. If the Delivery Date is postponed
pursuant to Section 3.02(c) or Section 3.05 of the Participation Agreement, the
proceeds of the Specified Investments referred to in the preceding sentence may
be invested in Specified Investments which mature within 14 days after the
rescheduled Delivery Date. If no Delivery Date occurs, then any Specified
Investment shall mature no later than the 15th day after the Cut-Off Date.
(c) If for any reason the Indenture Trustee shall be required to make
any distributions of the Liquid Collateral prior to the maturity date of any
Specified Investment, the Indenture Trustee shall cause the same to be sold in
accordance with standard commercial practices, and the Lessee, for the account
of the Owner Trustee, shall forthwith compensate the Indenture Trustee for any
Losses as provided in Section 17.02(a) of the Participation Agreement.
(d) Pursuant to Section 17.02(b) of the Participation Agreement,
interest payable on the Certificates during the period in which funds are on
deposit in the Collateral Account shall, to the extent investment earnings in
the Collateral Account are insufficient to fund such interest, be paid by the
Lessee.
Section 2.15. Release of Collateral Account on Delivery Date or
Assumption of Certificates. (a) Subject to the satisfaction or waiver of the
conditions precedent to the Indenture Trustee's obligations set forth in Section
4.02 of the Participation Agreement, on the Delivery Date or, if applicable, the
date the Lessee assumes the obligations of the Owner Trustee under the
Certificates pursuant to Section 3.05(a) of the Participation Agreement, the
Indenture Trustee shall release from the Collateral Account an amount of Liquid
Collateral, equal to the lesser of (A) the Debt Portion and (B) the amount
actually in the Collateral Account on the Delivery Date. Such amount so
released, together with the amount of any Losses received from the Lessee
pursuant to Section 17.02(a) of the Participation Agreement, shall be used to
finance a portion of the Purchase Price as contemplated by Section 3.02(a) or
Section 3.05(a), as the case may be, of the Participation Agreement. Any amount
remaining in the Collateral Account after such release (net of any uncompensated
Losses) shall be remitted by the Indenture Trustee on behalf of the Owner
Trustee to the Lessee pursuant to Section 3.02(a)(C) of the Participation
Agreement.
(b) The Lien of this Indenture on the Collateral Account and the Liquid
Collateral shall terminate on (i) the Delivery Date following the transfer of
amounts described in Section 3.02(a) or Section 3.05(a), as the case may be, of
the Participation Agreement, (ii) the assumption by the Lessee of the
obligations of the Owner Trustee under the Certificates pursuant to Section
3.05(a) of the Participation Agreement or (iii) the prepayment of the
Certificates pursuant to Section 3.05(b) of the Participation Agreement.
Section 2.16. Cut-Off Date. In the case of a prepayment under Section
6.02(a)(vi) hereof, the Indenture Trustee shall release from the Collateral
Account all amounts held in the Collateral Account on such date. Such amount so
released, together with the amount of any Losses received from the Lessee
pursuant to Sections 17.02(a) and 17.02(c) of the Participation Agreement not
then deposited in the Collateral Account, shall be applied to pay amounts due
under Section 6.02(b)(1) hereof on the 15th day following the Cut-Off Date, and
any amount (net of any uncompensated Losses) remaining after such release and
application shall be remitted by the Indenture Trustee, on behalf of the Owner
Trustee, to the Lessee.
Section 2.17. Subordination. (a) The Owner Trustee and, by acceptance
of its Certificates of any Series, each Holder of such Series, hereby agree that
no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in clause (v), (vi) or (vii) of Section
7.01 hereof, except as expressly provided in Article V hereof.
(b) By the acceptance of its Certificates of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a Holder, shall receive any payment or distribution on any
Secured Obligations in respect of such Series which it is not entitled to
receive under this Section 2.17 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.17(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.17, the term "Senior Holder" shall mean,
(i) the Holders of Series A Certificates until the Secured Obligations in
respect of Series A Certificates have been paid in full, (ii) after the Secured
Obligations in respect of Series A Certificates have been paid in full, the
Holders of Series B Certificates until the Secured Obligations in respect of
Series B Certificates have been paid in full, (iii) after the Secured
Obligations in respect of Series B Certificates have been paid in full, the
Holders of Series C Certificates until the Secured Obligations in respect of
Series C Certificates have been paid in full, and (iv) after the Secured
Obligations in respect of Series C Certificates have been paid in full, the
Holders of Series D Certificates until the Secured Obligations in respect of
Series D Certificates have been paid in full.
Section 2.18. Reoptimization. The Owner Trustee shall have the right,
on the Initial Reoptimization Date and the Reoptimization Date, to modify the
schedule of principal payments of the Certificates subject to the terms and
conditions set forth in Section 2.03(b) or Section 15.02, as applicable, of the
Participation Agreement. To give effect to the foregoing the Indenture Trustee
shall execute an amendment to this Indenture which shall amend Section 6.06 and
Schedule II hereof to set forth the new schedule of principal payments and
Schedule I to each Certificate shall be amended accordingly. The Indenture
Trustee shall deliver such amendments to the Subordination Agent on behalf of
the Pass Through Trustee for each of the Pass Through Trusts. To the extent that
such amendment of this Indenture occurs later than the Delivery Date, this
Indenture, as amended, shall, if required, be duly filed for recordation with
the Aeronautics Authority.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal. Make-Whole Premium and Interest.
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Certificates and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under the
Certificates shall be payable in dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Department (or such other account at
such other financial institution as the Indenture Trustee may designate for the
purpose). If any amount payable under the Certificates 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 (provided that payment is made on
such next succeeding Business Day) additional interest thereon for the period of
such extension.
Section 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented for
payment and (b) a facility or agency where the Certificates may be presented for
registration of transfer and for exchange and for prepayment as provided in this
Indenture (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Certificates and their transfer and exchange.
The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars")
for the Certificates and may terminate any such appointment at any time upon
written notice. The term "Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the
office of Indenture Trustee, will, with the consent of the Lessee, appoint, in
the manner provided in Section 12.02 hereof, an Indenture Trustee, so that there
shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its sole
discretion shall appoint a paying agent (the "Paying Agent"), it will cause the
Paying Agent to execute and deliver an instrument in which the Paying Agent
shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such agent
for the payment of the principal of, and interest and Make-Whole
Premium, if any, on the Certificates (whether such sums have been paid
to it by the Indenture Trustee or the Owner Trustee) in trust for the
benefit of the Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any
failure by the Owner Trustee to make any payment of the principal of or
interest or Make-Whole Premium, if any, on the Certificates when the
same shall be due and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to the
provisions of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of SSB and the Owner Trustee.
(a) SSB hereby covenants and agrees to perform its covenants set forth in Sections 7.04(b) and
7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee
shall have actual knowledge of an Indenture Event of Default, an
Indenture Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Indenture Event of Default, Indenture
Default or Event of Loss to the Indenture Trustee, the Lessee and the
Owner Participant;
(ii) 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 from an
insurer or an insurance broker received pursuant to Section 12 of the
Lease, to the extent that the same shall not have been furnished to the
Indenture Trustee;
(iii) 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 Indenture Documents; and
(iv) except as contemplated by the Operative Agreements, the
Owner Trustee will not contract for, create, incur or assume any debt,
and will not guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise take action to become contingently liable, directly or
indirectly, in connection with the debt of any other Person.
Section 3.06. [Reserved]
Section 3.07. Disposal of Trust Indenture Estate. At any time and from
time to time any part of the Trust Indenture Estate may be sold or disposed of
in accordance with the provisions of this Indenture and the Lease. The Indenture
Trustee shall, from time to time, release any part of the Trust Indenture Estate
so sold or disposed of or as to which an Event of Loss has occurred or as to
which the Lease has been terminated from the Lien of this Indenture. In
addition, to the extent that such property constitutes an Airframe or Engine,
the further requirements of Section 9.08 hereof shall be complied with.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR SSB NOR THE
OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that SSB warrants that on the Delivery Date (a) the Owner
Trustee shall have received whatever title was conveyed to it by the Seller, and
(b) the Aircraft shall be free and clear of Lessor's Liens attributable to SSB.
Neither SSB nor the Indenture Trustee 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 Certificates or any Indenture Document
or as to the correctness of any statement contained in any thereof, except for
the representations and warranties of SSB and the Indenture Trustee made under
this Indenture or in the Participation Agreement or of the Owner Participant
made under the Participation Agreement.
Section 3.09. Further Assurances: Financing Statements. At any time and from time to time, upon the
request of the Indenture Trustee or the Lessee, at the expense of the Lessee, the Owner Trustee shall promptly
and duly execute and deliver any and all such further instruments and documents as may be specified in such
request and as are necessary or advisable to perfect, preserve or protect the Liens 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 granted herein, 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 Liens or assignments created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists: Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar shall
furnish to the Indenture Trustee semi-annually not more than ten days after each
Record Date, as of such Record Date, or at such other times as the Indenture
Trustee may request in writing, a list, in such form and as of such date as the
Indenture Trustee may reasonably require, containing all the information in the
possession or control of the Registrar as to the names and addresses of the
Holders and the amounts and Maturities of the Certificates held by such Holders.
(b) Ownership of the Certificates shall be proved by the Register kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise provided in
Section 5.03 hereof, each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent, any payment received by the Indenture
Trustee pursuant to Section 8.03(a) hereof and any payment received by the
Indenture Trustee pursuant to Section 17.02(b) (including any amount received by
the Indenture Trustee pursuant to a draw on the Letter of Credit pursuant to
such Section 17.02(b) and Section 5.10 hereof) or 17.02(c) of the Participation
Agreement shall be distributed by the Indenture Trustee no later than the time
herein provided in the following order of priority:
first, (i) 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
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due
under all Series A Certificates shall be distributed to the Holders of
Series A Certificates ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series A Certificate bears to the aggregate amount of the
payments then due under all Series A Certificates;
(ii) after giving effect to paragraph (i) above, 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 Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due under all
Series B Certificates shall be distributed to the Holders of Series B
Certificates ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under
each Series B Certificate bears to the aggregate amount of the payments
then due under all Series B Certificates;
(iii) after giving effect to paragraph (ii) above, 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 Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due under all
Series C Certificates shall be distributed to the Holders of Series C
Certificates ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under
each Series C Certificate bears to the aggregate amount of the payments
then due under all Series C Certificates; and
(iv) after giving effect to paragraph (iii) above, 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 Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due under all
Series D Certificates shall be distributed to the Holders of Series D
Certificates ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under
each Series D Certificate bears to the aggregate amount of the payments
then due under all Series D Certificates; and
second, the balance if any of such installment or payment remaining thereafter
shall be distributed to the Owner Trustee, or as the Owner Trustee may
request, for distribution pursuant to the Trust Agreement.
Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as
otherwise provided in Section 5.03 hereof, any payment received by the Indenture
Trustee as the result of an Event of Loss with respect to the Aircraft
(including pursuant to Section 11(a)(2) of the Lease, but, in the case of such
Section 11(a)(2), subject to the time limits specified therein) or as the result
of, or in connection with any event under the Lease giving rise to, a prepayment
pursuant to Section 6.02 hereof, shall be promptly distributed by the Indenture
Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or expenses reasonably incurred in connection
with such prepayment,
second, (i) to pay the amounts specified in paragraph (i) of clause "second" of Section 5.03 hereof then
due and payable in respect of the Series A Certificates;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series B Certificates;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series C Certificates;
and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series D Certificates;
provided, that payments pursuant to this clause "second" shall be made without the payment of Make-Whole
Premium; and
third, as provided in clause "third" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Section 11(a)(1) of the Lease and
Section 9.08 hereof, any proceeds 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 Trust Indenture Estate and, unless otherwise applied pursuant to Section
5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the
release of such damaged Airframe and the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 11 or 12
of the Lease as the result of loss or damage not constituting an Event of Loss
with respect to the Aircraft, or as a result of such loss or damage constituting
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 Section 11 or 12 but for the fact
that a Specified Default exists shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the Participation
Agreement and shall be invested in accordance with the terms of Section 5.08
hereof and at such time as the conditions for payment to the Lessee specified in
Section 11 or 12, as the case may be, shall be fulfilled and no Specified
Default exists, such amount, and the proceeds of any investment thereof, shall,
to the extent not theretofore applied, be paid to the Lessee to the extent
provided in the Lease.
Section 5.03. Payment After Indenture Event of Default. etc. Except as
otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all
payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall have
occurred and so long as such an Indenture Event of Default shall be continuing,
and after the Certificates shall have become due and payable as provided in
Section 7.02(b) or (c) hereof, 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
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any tax, expense, charge or other loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant to Section 7.03(b)
hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed) (including,
without limitation, the expenses of any sale, taking or other proceeding, attorneys' fees and
expenses, court costs, and any other expenditures incurred or expenditures or advances made by
the Indenture Trustee or the Holders in the protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the Indenture Trustee or the Holders, liquidated or
otherwise, upon such Indenture Event of Default) shall be applied by the Indenture Trustee as
between itself and the Holders in reimbursement of such expenses;
second, (i) so much of such payments or amounts remaining as shall be required to pay in full the
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aggregate unpaid Principal Amount of all Series A Certificates, and the accrued but unpaid
interest and other amounts due thereon and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series A Certificates to the date of distribution, shall be
distributed to the Holders of Series A Certificates, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority
of one over the other, in the proportion that the aggregate unpaid Principal Amount of all
Series A Certificates held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Premium) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all Series A Certificates held
by all such Holders plus the accrued but unpaid interest and other amounts due thereon (other
than Make-Whole Premium) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be required to pay
in full the aggregate unpaid Principal Amount of all Series B
Certificates, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations (other
than Make-Whole Premium) in respect of the Series B
Certificates to the date of distribution, shall be distributed
to the Holders of Series B Certificates, and in case the
aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series B Certificates held by
each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series B Certificates held by
all such Holders plus the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole Premium) to
the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required to pay
in full the aggregate unpaid Principal Amount of all Series C
Certificates, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations (other
than Make-Whole Premium) in respect of the Series C
Certificates to the date of distribution, shall be distributed
to the Holders of Series C Certificates, and in case the
aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series C Certificates held by
each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series C Certificates held by
all such Holders plus the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole Premium) to
the date of distribution; and
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay
in full the aggregate unpaid Principal Amount of all Series D
Certificates, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations (other
than Make-Whole Premium) in respect of the Series D
Certificates to the date of distribution, shall be distributed
to the Holders of Series D Certificates, and in case the
aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series D Certificates held by
each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series D Certificates held by
all such Holders plus the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole Premium) to
the date of distribution;
(it being understood that amounts payable under this clause
"second" shall not in any event include Make-Whole Premium);
and
third, 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.
Section 5.04. Certain Payments. (a) Except as otherwise provided in this Indenture, any payments
received by the Indenture Trustee which are to be held or applied according to any provision in any other
Indenture Document shall be held or applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon receipt, any
indemnity or other payment received by it from the Owner Trustee or the Lessee
in respect of (i) the Indenture Trustee in its individual capacity, (ii) the
Subordination Agent, (iii) each Liquidity Provider, and (iv) the Pass-Through
Trustee, in each case whether pursuant to Article 8 or 9 of the Participation
Agreement or as Supplemental Rent, directly to the Person (which may include the
Indenture Trustee) entitled thereto. Any payment received by the Indenture
Trustee under clause (b) of the last paragraph of Section 2.04 shall be
distributed to the Subordination Agent to be distributed in accordance with the
terms of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained herein, any sums
received by the Indenture Trustee which constitute Excepted Payments shall be
distributed promptly upon receipt by the Indenture Trustee directly to the
Person or Persons entitled thereto.
Section 5.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document shall be distributed by the
Indenture Trustee (a) to the extent received or realized at any time prior to
the payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized at
any time after payment in full of all obligations to the Holders, in the
following order of priority:
first, in the manner provided in clause "first" of Section 5.03 hereof, and
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second, in the manner provided in clause "third" of Section 5.03 hereof.
Section 5.06. 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 immediately available 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 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 hereunder for distribution in accordance with
the Trust Agreement shall be distributed by wire transfer of immediately
available funds of the type received by the Indenture Trustee to such account of
the Owner Participant as may be specified pursuant to Section 2.06 of the Trust
Agreement.
Section 5.07. Application of Payments. Each payment of principal of and interest or other amounts
due on each Certificate shall, except as otherwise provided herein, be applied, first, to the payment of interest on
such Certificate due and payable
to the date of such payment, as provided in such Certificate,
as well as any interest on overdue principal and Make-Whole
Premium, if any, and, to the extent permitted by law, interest
and other amounts due thereunder, second, to the payment of any other amount (other than the principal of such
Certificate) due hereunder
to the Holder of such Certificate or under such Certificate, third, to the payment of the principal of such
Certificate if then due hereunder or under such
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Certificate and fourth, the balance, if any remaining thereafter, to the payment of the principal of such
Certificate remaining unpaid (applied to the installments of principal amount in the inverse order of their
normal maturity) (provided that such Certificate shall not be subject to prepayment without the
consent of the affected Holder except as permitted by Sections 6.02, 6.06 and 8.02 hereof);
provided that, solely for the purpose of determining whether an Indenture Event of Default
shall have occurred and be continuing, each such payment shall be deemed applied in the
following order of priority: first, in the manner provided in clause "first" above, second, in
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the manner provided in clause "third" above, third, in the manner provided in clause "second"
----- ------
above and fourth, in the manner provided in clause "fourth" above.
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Section 5.08. Investment of Amounts Held by Indenture Trustee. Amounts
held by the Indenture Trustee pursuant to Section 5.02(b) hereof or pursuant to
any provision of any Indenture Document providing for investment by the
Indenture Trustee of sums pursuant to Section 11(e) of the Lease or this Section
5.08 shall be invested by the Indenture Trustee from time to time in securities
selected by (i) so long as no Event of Default shall have occurred and be
continuing, the Lessee (and in the absence of written direction by the Lessee,
the Indenture Trustee shall invest such monies in direct obligations of the
United States of America) or (ii) so long as an Event of Default shall have
occurred and be continuing, the Indenture Trustee and in each case shall be of
the type meeting the criteria for Permitted Investments. 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 Lessee shall be responsible
for and will promptly pay to the Indenture Trustee or the Owner Trustee, as the
case may be, on demand, the amount of any loss realized as the result of any
such investment (together with any fees, commissions and other costs and
expenses, if any, incurred by the Indenture Trustee or the Owner Trustee in
connection with such investment), such amount to be disposed of in accordance
with the terms hereof or the Lease, as the case may be. The Indenture Trustee
shall not be liable for any loss resulting from any investment made by it or any
investment sold by it under this Indenture in accordance with instructions from
the Lessee other than by reason of its willful misconduct or gross negligence,
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. Notwithstanding the foregoing, amounts paid to the Indenture Trustee
pursuant to the first sentence of Section 17.02(b) of the Participation
Agreement or Section 5.10 hereof shall be held by the Indenture Trustee in a
non-interest bearing account until distributed by the Pass-Through Trustee on
the next succeeding Payment Date.
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall
be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the Lessee
notifies the Indenture Trustee in writing to the contrary within 30 days of the
date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee shall withhold
any Taxes required to be withheld, except to the extent that the Holder has
furnished evidence satisfactory to the Indenture Trustee of any exemption from
withholding claimed by such Holder and under no circumstances shall the failure
of any such Holder to receive any amounts so withheld constitute an Indenture
Event of Default. Notwithstanding any provision to the contrary in Sections 5.01
through 5.05 hereof and subject to Article 8 of the Participation Agreement, if
the Lessee is required to pay any such Tax, or any interest or penalty thereon,
or to indemnify the Owner Participant or the Owner Trustee with respect thereto
pursuant to Section 8.01(c) of the Participation Agreement, the Lessee shall be
entitled to receive any payments otherwise distributable to the Holder of any
Certificate who was subject to such Tax pursuant to Sections 5.01 to 5.05 hereof
until the amounts the Lessee shall have so paid in respect of any such Tax
[(together with interest thereon at the Debt Rate)] shall have been recovered in
full by the Lessee.
Section 5.10. Letter of Credit. If an amount is due and payable by the
Lessee pursuant to the first sentence of Section 17.02(b) of the Participation
Agreement, the Indenture Trustee shall draw upon the Letter of Credit in an
amount equal to such amount due from the Lessee, and such draw shall satisfy the
obligation of the Lessee under such section with respect to such amount.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Except as Specified. Except as provided in Sections 6.02, 6.06 and 8.02
hereof, the Certificates may not be prepaid prior to their respective Maturities.
Section 6.02. Prepayment of Certificates. (a) The Outstanding Certificates shall be prepaid in full
(and not in part):
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed
on the Airframe (unless pursuant to Section 11(a)(1) of the Lease and
Section 9.08 hereof replacement equipment is substituted therefor).
(ii) If the Lessee, pursuant to Section 16(a) of the Lease,
gives notice of purchase of the Aircraft (and Section 2.12 hereof is
not applicable in connection with such purchase), but subject to
Section 6.02(c) below.
(iii) If the Owner Participant, or the Owner Trustee on behalf
of the Owner Participant, gives notice of prepayment to the Indenture
Trustee pursuant to Section 8.02 hereof (unless such notice is revoked
in accordance with such Section).
(iv) If the Lessee, pursuant to Section 3(g) of the Lease,
gives notice of a voluntary termination for obsolescence or surplus,
but subject to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement
in connection with a refinancing of the Certificates, but subject to
Section 6.02(c) below.
(vi) As contemplated by Section 2.16 hereof and Section
3.05(b) of the Participation Agreement if the Delivery Date has not
occurred on or prior to the Cut-Off Date.
(vii) At the option of the Owner Trustee, with the prior
written consent of the Lessee and the Owner Participant, upon not less
than 25 days' prior written notice.
(viii) If a Triggering Event (as defined in the Intercreditor
Agreement) occurs prior to the earliest of (A) the Delivery Date, (B)
the date the obligations of the Owner Trustee under the Certificates
are assumed by the Lessee pursuant to Section 3.05(a) of the
Participation Agreement and (iii) the Cut-Off Date.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
16(a) or 3(g) of the Lease or Article 15 of the Participation Agreement, as the
case may be, shall give irrevocable (subject to Section 6.02(c) hereof) written
notice to the Indenture Trustee and to the Holders of all of the Certificates
specifying the Business Day on which the Certificates shall be prepaid. In the
case of a prepayment of the Certificates pursuant to Section 6.02(a)(i) above,
the Certificates shall be prepaid in full on the Loss Payment Date as defined in
Section 11(a)(2) of the Lease. In the case of a prepayment of the Certificates
pursuant to Section 6.02(a)(iii) above, the Certificates shall be prepaid in
full on the date so designated in the notice referred to in Section 8.02 hereof.
In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(ii)
or (iv) above, the Certificates shall be prepaid in full on the Termination
Date. In the case of a prepayment of the Certificates pursuant to Section
6.02(a)(v) above, the Certificates shall be prepaid on the effective date of the
Refinancing. In the case of a prepayment of the Certificates pursuant to Section
6.02(a)(vi) above, the Certificates shall be prepaid on the 15th day following
the Cut-Off Date. In the case of a prepayment of the Certificates pursuant to
Section 6.02(a)(vii) above, the Certificates shall be prepaid on the date
designated in the notice referred to therein. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a) (viii) above, the Certificates shall be
prepaid on the Special Distribution Date (as defined in the Intercreditor
Agreement) as provided in Section 2.4(b)(ii) of the Intercreditor Agreement. The
day on which the Certificates are to be prepaid pursuant to this Section 6.01(b)
is herein referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) if such prepayment is made pursuant to Section 6.02(a)(i),
(iii) (if clause (i), but not clause (ii) or clause (iii) of the first
sentence of Section 8.02(a) of the Indenture is applicable and such
prepayment is made when an Event of Default has occurred and been
continuing for 180 days or more, or if clause (ii) or clause (iii) of
the first sentence of Section 8.02(a) hereof is applicable),
6.02(a)(vi) or 6.02(a)(viii) above, the sum of (A) the aggregate
principal amount of such Certificates then Outstanding, (B) accrued
interest on the Certificates to the Prepayment Date and (C) all other
aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole
Premium or other premium or penalty, or
(2) if such prepayment is made pursuant to Section
6.02(a)(ii), 6.02(a)(iii) (if clause (i), but not clause (ii) or clause
(iii) of the first sentence of Section 8.02(a) of the Indenture is
applicable and such prepayment is made when an Event of Default has
occurred and been continuing for less than 180 days) 6.02(a)(iv),
6.02(a)(v) or 6.02(a)(vii) above, the sum of the amounts specified in
clauses (A), (B) and (C) of the preceding clause (1) plus any
Make-Whole Premium payable in respect of all Certificates
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section 3(g) of the Lease, no
Termination Date shall occur, or if no refinancing shall occur pursuant to
Article 15 of the Participation Agreement, the Lessee shall give notice thereof
to the Indenture Trustee, and the prepayment proposed to be effected in respect
thereof shall not occur.
Section 6.03. Notice of Prepayment to Holders. In order to effect any
prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give
prompt notice by first class mail of prepayment to each Holder of an Outstanding
Certificate. Any notice of prepayment given by the Owner Trustee may be revoked
by the Owner Trustee at any time on or before the Prepayment Date by prompt
notice to the Holders except as otherwise provided in the Lease or the
Participation Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions
hereof, the Prepayment Price will become due and payable, and that
interest on the Certificates shall cease to accrue on and after such
Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price. On the Prepayment Date or the Sinking Fund Redemption Date (as defined in
Section 6.06 hereof), the Owner Trustee shall, to the extent an amount equal to
the Prepayment Price or the Sinking Fund Redemption Price (as defined in Section
6.06 hereof), as the case may be, shall not then be held in cash or Permitted
Investments (marked-to-market net of all costs and expenses of liquidation
thereof) by the Indenture Trustee in immediately available funds and deposited
for the purpose, pay to the Indenture Trustee an amount equal to the difference
between (a) the amount then so held and (b) the Prepayment Price or the Sinking
Fund Redemption Price, as the case may be. If there shall so be on deposit
and/or deposited the applicable Prepayment Price or Sinking Fund Redemption
Price on or prior to a Prepayment Date or Sinking Fund Redemption Date, interest
shall cease to accrue in respect of all or, in the case of a mandatory sinking
fund redemption, the relevant portion being prepaid of, the Outstanding
Certificates on and after such Prepayment Date or such Sinking Fund Redemption
Date.
Section 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof or (B) as otherwise provided in the
Lease) become due and payable and from and after such Prepayment Date (unless
there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of its
Certificate for prepayment in accordance with said notice, such Holder shall be
paid the principal amount of its Certificate then outstanding, accrued interest
thereon to the Prepayment Date, all other sums due to such Holder hereunder,
under the Participation Agreement or the Lease, plus, if a Make-Whole Premium is
payable pursuant to Section 6.02(b) hereof, the Make-Whole Premium in respect of
such Certificate.
If any Certificate called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Certificate.
Section 6.06. Mandatory Sinking Fund Redemption. The Certificates shall
be subject to partial redemption, at the aggregate principal amount set forth
for the Certificates of the respective Series and Maturity, on a pro rata basis,
on each date specified in this Section (a "Sinking Fund Redemption Date") for
such payment on the Certificates of such Series and Maturity. The Owner Trustee
shall deposit funds sufficient to pay the Sinking Fund Redemption Price with the
Indenture Trustee as provided in Section 6.04 hereof. The Indenture Trustee
shall pay from the amounts so deposited on each applicable Sinking Fund
Redemption Date to the Certificates of each Series in the order of priority set
forth in clause "first" of Section 5.01 and among the Holders of the
Certificates of each Series then Outstanding on a pro rata basis the aggregate
principal amount set forth in Schedule II hereto, together with accrued interest
to such Sinking Fund Redemption Date, but without Make-Whole Premium (the
"Sinking Fund Redemption Price"):
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. 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 it 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
administrative or governmental body):
(i) any Event of Default specified in Section 14 of the Lease
(other than an Event of Default arising solely as the result of the
failure to make an Excepted Payment unless the Owner Participant shall
notify the Indenture Trustee in writing that such failure shall
constitute an Indenture Event of Default); or
(ii) the failure of the Owner Trustee other than by reason of
a Default or an Event of Default (i) to pay principal, interest or
Make-Whole Premium, if any, on any Certificate when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Certificates when due and such failure shall have continued unremedied
for a period of 30 days after the Owner Trustee and the Owner
Participant shall receive written demand therefor from the Indenture
Trustee or by the Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates; or
(iii) (A) any representation or warranty made by SSB, the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor
or any Owner Trustee Guarantor, in any Operative Agreement or in any
certificate of SSB, the Owner Trustee, the Owner Participant, or any
Owner Participant Guarantor furnished to the Indenture Trustee or any
Holder in connection herewith or therewith or pursuant hereto or
thereto shall prove to have been incorrect when made and was and
remains in any respect material to the Holders and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, and such
misrepresentation shall not have been corrected within 30 days
following notice thereof identified as a "Notice of Indenture Event of
Default" being given to the Owner Trustee and the Owner Participant by
the Indenture Trustee or by a Majority in Interest of Certificate
Holders; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or Section 3.05(b)(iii)
hereof or Section 7.02(b) or 7.12 of the Participation Agreement shall
be breached in any respect, (y) covenant made by the Owner Participant
in Section 7.02(c) or Section 7.13 of the Participation Agreement shall
be breached in any respect, or (z) other covenant made by the Owner
Trustee, in its individual capacity or as Owner Trustee, or by any
Owner Trustee Guarantor, or by any Owner Participant or by any Owner
Participant Guarantor in any Operative Agreement shall be breached in
any respect and such breach shall remain unremedied for a period of 30
days after there has been given to the Owner Trustee and any Owner
Participant by the Indenture Trustee or by Holders holding not less
than 25% in aggregate principal amount of Outstanding Certificates a
written notice identified as a "Notice of Indenture Event of Default"
specifying such breach and requiring it to be remedied; or
(iv) the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, any Owner Participant or any Owner Participant Guarantor
shall file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation;
(v) an order for relief shall be entered in respect of the
Owner Trustee or any Owner Trustee Guarantor or any Owner Participant
or any Owner Participant Guarantor or the Lessor's Estate by a court
having jurisdiction in the premises in an involuntary case under the
federal bankruptcy laws as now or hereafter in effect; or the Owner
Trustee or any Owner Trustee Guarantor or any Owner Participant or any
Owner Participant Guarantor or the Lessor's Estate shall file any
answer admitting or not contesting the material allegations of a
petition filed against the Owner Trustee or any Owner Trustee Guarantor
or any Owner Participant or any Owner Participant Guarantor or the
Lessor's Estate in any proceeding referred to in clause (vi) below or
seek or consent or acquiesce in the appointment of any trustee,
custodian, receiver or liquidator of the Owner Trustee or any Owner
Trustee Guarantor or any Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, or of all or any
substantial part of its properties; or
(vi) without the consent or acquiescence of the Owner Trustee
or any Owner Trustee Guarantor or any Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, an
order shall be entered constituting an order for relief or approving a
petition for relief or reorganization or any other petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar statute, law or regulation, or if any
such petition shall be filed against the Owner Trustee or any Owner
Trustee Guarantor or any Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, and such petition
shall not be dismissed within 60 days, or if, without the consent or
acquiescence of the Owner Trustee or any Owner Trustee Guarantor or any
Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, an order shall be entered appointing a
trustee, custodian, receiver or liquidator of the Owner Trustee or any
Owner Trustee Guarantor or any Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, or of
all or any substantial part of the properties of the Owner Trustee or
any Owner Trustee Guarantor or any Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and
such order shall not be dismissed within 60 days; or
(vii) any Owner Trustee Guaranty or any Owner Participant
Guaranty shall cease to be a valid and enforceable obligation of any
Owner Trustee Guarantor or any Owner Participant Guarantor, as the case
may be, or otherwise shall not be in full force and effect.
Section 7.02. 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, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII, and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Section 15
of the Lease; provided that without the consent of the Owner Trustee and the
Owner Participant such exercise of remedies shall not occur until after the
latest date on which the Owner Trustee may cure the related Event of Default
pursuant to Section 8.03 hereof. The Indenture Trustee may (subject to the
provisions of the next succeeding paragraph) 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, the Lessee and any transferee of the Lessee
(subject to Section 15.05 hereof), and all Persons claiming under any of them
wholly or partly therefrom. In addition, the Indenture Trustee may (subject to
the provisions of the next succeeding paragraph) exercise any other right or
remedy in lieu of or in addition to the foregoing that may be available to it
under applicable law, or proceed by appropriate court action to enforce the
terms hereof, of the Lease, or both, or to rescind the Lease. 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.
Notwithstanding the foregoing, it is understood and agreed that if the
Indenture Trustee shall proceed to foreclose the Lien of this Indenture, it
shall substantially simultaneously therewith, to the extent the Indenture
Trustee is then entitled to do so hereunder and under the Lease, and is not then
stayed or otherwise prevented from doing so, proceed (to the extent it has not
already done so) to declare the Lease in default and commence the exercise in
good faith of one or more of the significant remedies under Section 15 of the
Lease (as the Indenture Trustee determines in its sole discretion) for the
purpose of recovering the Aircraft. It is further understood and agreed that if
the Indenture Trustee is unable to exercise one or more remedies under Section
15 of the Lease because of any stay or operation of law or otherwise, the
Indenture Trustee shall not be entitled to foreclose the Lien of this Indenture
(A) until the earlier of (i) 60 days from the date of any such stay or
applicable order under Section 1110 of the Bankruptcy Code plus any extension
consented to by the Indenture Trustee or the Holders of Certificates of such
period as permitted under Section 1110(b) of the Bankruptcy Code and (ii) the
date of actual repossession of the Aircraft by the Indenture Trustee or (B) if
the Lessee has agreed to perform or assume the Lease pursuant to Section 365 or
1110 of the Bankruptcy Code and no Event of Default (other than as specified in
Section 14(f), (g), (h) or (i) of the Lease, or other Event of Default in
respect of which the 30-day period referred to in clause (a)(1)(B)(ii)(l) of
Section 1110 of the Bankruptcy Code shall not yet have expired) shall be
continuing. For the avoidance of doubt, it is expressly understood and agreed
that except as aforesaid the above-described inability of the Indenture Trustee
to exercise any right or remedy under the Lease shall in no event and under no
circumstances prevent the Indenture Trustee from exercising all of its rights,
powers and remedies under this Indenture, including, without limitation, this
Article VII. The Indenture Trustee further agrees that notice of intent to
foreclose shall be given to the Owner Trustee at the earlier of the commencement
of any proceeding or at least 30 days prior to the consummation of foreclosure
of the Lien of this Indenture.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi) of
Section 7.01 hereof shall occur and be continuing, the unpaid principal of all
Outstanding Certificates, together with interest accrued but unpaid thereon and
all other amounts due thereunder, but without Make-Whole Premium, shall
immediately become due and payable, without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Certificate Holders, at any time, by written notice to
the Owner Trustee, the Owner Participant and the Lessee, declare the principal
of all the Certificates to be due and payable, whereupon the unpaid principal
amount of all Outstanding Certificates, together with accrued interest thereon
and all other amounts due thereunder, but without Make-Whole Premium, shall
immediately become due and payable without presentment, demand, protest or other
notice, all of which are hereby waived. At any time after such declaration and
prior to the sale or disposition of the Trust Indenture Estate, however, the
Holders of not less than 50% in aggregate principal amount of Outstanding
Certificates, by notice to the Indenture Trustee, the Owner Trustee and the
Lessee, may rescind such declaration, whether made by the Indenture Trustee on
its own accord or as directed, if (x) there has been paid or deposited with the
Indenture Trustee a sum sufficient to pay all overdue installments of interest
on all Certificates (together, to the extent permitted by law, with interest on
such overdue installments of interest), the principal on any Certificates that
would have become due otherwise than by such declaration of acceleration, all
sums paid or advanced by the Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, or (y) all Indenture Events of Default (other than the
nonpayment of principal that has become due solely because of such acceleration)
have been either cured or waived as provided in Section 7.11 hereof. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
Section 7.03. Return of Aircraft. etc. (a) Subject to Section 7.02
hereof, if an Indenture Event of Default shall have occurred and be continuing,
at the request of the Indenture Trustee, the Owner Trustee shall promptly
execute and deliver to the Indenture Trustee such 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 Trust Indenture Estate to which the
Indenture Trustee shall at the time be entitled under this Indenture. Subject to
the foregoing, if the Owner Trustee shall for any reason fail to execute and
deliver such documents after such request by the Indenture Trustee, the
Indenture Trustee may pursue all or part of such Trust Indenture Estate wherever
it may be found and enter any of the premises of the Lessee or the Owner Trustee
wherever such Trust Indenture Estate may be or be supposed to be and search for
such Trust Indenture Estate and take possession of and remove such Trust
Indenture Estate. All expenses of pursuing, searching for and taking such Trust
Indenture Estate shall, until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In each
case subject to Section 7.02 hereof, the Indenture Trustee shall have the right
to maintain, use, operate, store, lease, control or manage the Trust Indenture
Estate and to carry on the business and to exercise all rights and powers of the
Owner Participant and the Owner Trustee relating to the Trust Indenture Estate,
as the Indenture Trustee may reasonably 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 all or
any part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive directly
all tolls, rents (including Rent), revenues, issues, income, products and
profits of the Trust Indenture Estate other than Excepted Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee under this Indenture. Such tolls, rents
(including Rent), revenues, issues, income, products and profits shall be
applied to pay the expenses of the use, operation, storage, leasing, control,
management, or disposition of the Trust Indenture Estate, and of all maintenance
and repairs, and to make all payments which the Indenture Trustee may be
required or may reasonably elect to make for any taxes, assessments, insurance
or other proper charges upon the Trust Indenture Estate (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 the Lessee),
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 for such purposes by the Indenture Trustee;
provided, that any excess amounts shall be promptly distributed in accordance
with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of Default
shall have occurred and be continuing and the Indenture Trustee shall be
entitled to exercise remedies hereunder, and subject to Article VIII hereof, the
Indenture Trustee, either with or without taking possession, and either before
or after taking possession, and without instituting any legal proceedings
whatsoever, may sell, assign, transfer and deliver the whole or, from time to
time, to the extent permitted by law, any part of the Trust Indenture Estate, or
any part thereof, or interest therein, at any private sale or public auction to
the highest bidder, with or without demand, advertisement or notice, except that
in respect of any private sale 30 days' prior written notice by registered mail
to the Owner Trustee and any Owner Participant will be provided, for cash or,
with the consent of the Owner Trustee and any Owner Participant, credit or for
other property, for immediate or future delivery, and for such price or prices
and on such terms as the Indenture Trustee in exercising reasonable commercial
discretion may determine; provided, that any such action shall be at the time
lawful and that all mandatory legal requirements shall be complied with. Any
notice required pursuant to the terms hereof in the case of a public sale, shall
state the time and place fixed for such sale. Any such public sale shall be held
at such time or times within ordinary business hours as the Indenture Trustee
shall fix in the notice of such sale. At any such sale, the Trust Indenture
Estate may be sold in one lot as an entirety or in separate lots. The Indenture
Trustee shall not be obligated to make any sale pursuant to such notice. The
Indenture Trustee may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for such sale, and any such sale may be made at any
time or place to which the same may be so adjourned without further notice or
publication. The Indenture Trustee may exercise such right of sale without
possession or production of the Certificates or proof of ownership thereof, and
as representative of the Holders may exercise such right without notice to the
Holders or without including the Holders as parties to any suit or proceedings
relating to the foreclosure of any part of the Trust Indenture Estate. The Owner
Trustee shall execute any and all such bills of sale, assignments and other
documents, and perform and do all other acts and things requested by the
Indenture Trustee in order to permit consummation of any sale of the Trust
Indenture Estate in accordance with this Section 7.03(c) and to effectuate the
transfer or conveyance referred to in the first sentence of this Section
7.03(c). Notwithstanding any other provision of this Indenture, the Indenture
Trustee shall not sell the Trust Indenture Estate or any part thereof unless the
Certificates shall have been accelerated.
(d) To the extent permitted by applicable law, and subject to Section
7.02 hereof, the Indenture Trustee or any Holder may be a purchaser of the Trust
Indenture Estate or any part thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due hereunder or under any of the Certificates secured hereby and any Holder may
apply against the purchase price therefor the amount then due to it hereunder,
under any other Indenture Document or under the Certificates held by such Holder
to the extent of such portion of the purchase price as it would have received
had it been entitled to share any distribution thereof. The Indenture Trustee or
any Holder or nominee thereof shall, upon any such purchase, acquire good title
to the property so purchased, free of the Lien of this Indenture and, to the
extent permitted by applicable law, free of all rights of redemption in the
Owner Trustee or the Owner Participant in respect of the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee) for all or any part of the Trust Indenture Estate, whether such
receivership be incidental to a proposed sale of the Trust Indenture Estate or
the taking of possession thereof or otherwise, and the Owner Trustee hereby
consents to the appointment of such receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the Trust Indenture
Estate shall be entitled to exercise all of the rights and powers of the
Indenture Trustee with respect to the Trust Indenture Estate.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee
shall fail to pay any amount payable hereunder or under the Certificates, the
Indenture Trustee, in its own name and as trustee of an express trust, shall be
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Owner Trustee and collect in the manner
provided by law out of the property of the Owner Trustee wherever situated, the
moneys adjudged or decreed to be payable; provided, that any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Owner Trustee
or its property, or in case of any other comparable judicial proceedings
relative to the Owner Trustee, or to the creditors or property of the Owner
Trustee, the Indenture Trustee, irrespective of whether the principal of the
Certificates shall then be due and payable as therein or herein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal, interest and other amounts owing and unpaid in respect of
the Certificates or hereunder, and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Holders allowed in any judicial proceedings relative to the Owner
Trustee or to the creditors or property of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Holders and of the
Indenture Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Certificates or the rights of any Holder thereof, or to authorize
the Indenture Trustee to vote in respect of the claim of any Holder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture,
or under any of the Certificates, may be enforced by the Indenture Trustee
without the possession of such Certificates. Any trial or other proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee in this Indenture shall be cumulative and
shall be in addition to every other right, power and remedy specifically given
herein or now or hereafter existing at law, in equity or by statute, and each
and every right, power and remedy whether specifically given herein 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 or the Holders, 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 later any
other right, power or remedy. No delay or omission by the Indenture Trustee or
of any Holder in the exercise of any right, remedy or power or in the pursuance
of any remedy shall impair any such right, power or remedy or be construed to be
a waiver of any default on the part of the Owner Trustee or the Lessee or to be
an acquiescence in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of Default
has occurred, has not been waived and is continuing, the Indenture Trustee may
in its discretion and subject to its rights of appropriate indemnification under
Sections 7.08 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee or
the Holders by this Indenture or by law; provided, that any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
Section 7.07 Discontinuance of Proceedings. In case the Indenture
Trustee or any Holder shall have instituted any proceeding to enforce any right,
power or remedy under this Indenture by foreclosure, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Indenture Trustee or such Holder,
then the Owner Trustee, the Indenture Trustee, any Owner Participant, the
Holders and the Lessee shall, subject to any binding determination in such
proceeding, be restored to their former positions and rights under this
Indenture with respect to the Trust Indenture Estate, and all rights, remedies
and powers of the Indenture Trustee and the Holders shall continue as if no such
proceeding had been instituted.
Section 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or for
the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Indenture Trustee written notice that an Indenture Event of
Default shall then have occurred and be continuing, as hereinbefore provided,
and a Majority in Interest of Certificate Holders shall have made written
request upon the Indenture Trustee to institute such action or proceedings in
its own name as trustee hereunder and shall have offered to the Indenture
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby and the Indenture Trustee for
60 days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Indenture
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by the Holder of each Certificate with every other
Holder of each other Certificate and the Indenture Trustee, that no one or more
Holders shall have any right in any manner whatever to affect, disturb or
prejudice the rights of any other Holder or the Lien of this Indenture or any
part of the Trust Indenture Estate or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 7.09. Unconditional Right of Holders to Payments on
Certificates. Notwithstanding any other provision in this Indenture and any
provision of any Certificate, the right of any Holder to receive payment of the
principal of and interest and Make-Whole Premium, if any, on such Certificate on
or after the respective due dates and in the manner expressed in such
Certificate, or, subject to Section 7.08 hereof, to institute suit for the
enforcement of any such payment on or after such respective dates as provided
herein, shall not be impaired or affected without the consent of such Holder.
Section 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent provided
in Sections 7.08 and 9.03 and Article XI hereof, such reasonable indemnification
as it may require against the costs, expenses and liabilities to be incurred by
the Indenture Trustee; and provided further that (subject to the provisions of
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forebearances specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders not joining in the giving of said
direction, it being understood that (subject to Section 9.02 hereof) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
Section 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the Indenture
Trustee shall waive any past Indenture Default and its consequences and upon any
such waiver such Indenture 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 impair any right consequent thereon; provided,
however, that in the absence of written instructions from all Holders and each
Liquidity Provider, the Indenture Trustee shall not waive any Indenture Default
(a) in the payment of the principal of or Make-Whole Premium, if any, or
interest on, or other amounts due under, any Certificate then Outstanding, or
(b) in respect of a covenant or provision of this Indenture which, under Article
XIII hereof, cannot be modified or amended without the consent of each Holder.
Section 7.12. Notice of Indenture Default. The Indenture Trustee shall
transmit to the Owner Trustee, the Holders and to any Owner Participant notice
of any Indenture Defaults actually known to a Responsible Officer of the
Indenture Trustee, such notice to be transmitted by mail to the Holders within
90 days, and to the Owner Trustee and any Owner Participant promptly after the
occurrence thereof, unless such Indenture Default shall have been cured before
the giving of such notice; provided that except in the case of a default in the
payment of the principal of or interest on any Certificate, under no
circumstances shall the Indenture Trustee give such notice to the Holders until
the expiration of a period of 60 days from the occurrence of such Indenture
Default; and provided further that, except in the case of default in the payment
of the principal of or interest on or any other amount due under any of the
Certificates, the Indenture Trustee shall be protected in withholding such
notice to the Holders if and so long as the board of directors, the executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers of the Indenture Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.
(a) Subject to Section 13.01 hereof and the provisions of paragraph (a)
immediately following the Granting Clause hereof, without the consent of a
Majority in Interest of Certificate Holders, the respective parties to the
Indenture Documents may not modify, amend or supplement any of said agreements,
or give any consent, waiver, authorization or approval thereunder, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions thereof or of modifying in any manner the rights of the
respective parties thereunder; provided, however, that the actions specified in
subsection (b) of this Section 8.01, the actions specified in Section 2.18
hereof, and the amendments contemplated by Section 2.03 of the Participation
Agreement (subject to the limitations set forth therein) may be taken without
the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section 8.01,
the Lessor and the respective parties to the Indenture Documents, at any time
and from time to time, without the consent of the Indenture Trustee or of any
Holder, may:
(1) so long as no Indenture Event of Default shall have
occurred and be continuing, modify, amend or supplement the Lease, or
give any waiver with respect thereto, except that without compliance
with subsection (a) of this Section 8.01 the parties to the Lease shall
not modify, amend or supplement, or give any waiver for the purpose of
adding any provisions to or changing in any manner or eliminating any
of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following
provisions of the Lease as in effect on the effective date hereof:
Sections 2, 3(c) (except to the extent such Section relates to amounts
payable (whether directly or pursuant to this Indenture) to Persons
other than Holders, each Liquidity Provider, the Subordination Agent
and the Indenture Trustee in its individual capacity), 3(e), 3(f)
(except insofar as it relates to the address or account information of
the Owner Trustee or the Indenture Trustee) (other than as such
Sections 3(c), 3(e) and 3(f) may be amended pursuant to Section 3(d) of
the Lease as in effect on the effective date hereof), 3(g) (except that
further restrictions may be imposed on the Lessee), 4, 6, 8, 10 (except
in order to increase the Lessee's liabilities or enhance the Lessor's
rights thereunder), 11 (except that additional requirements may be
imposed on the Lessee), 12 (except for Section 12(e) and except that
additional insurance requirements may be imposed on the Lessee), 14
(except to impose additional or more stringent Events of Default), 15
(except to impose additional remedies), 20 (except to impose additional
requirements on the Lessee), 23(f), and 26, and any definition of terms
used in the Lease, to the extent that any modification of such
definition would result in a modification of the Lease not permitted
pursuant to this subsection (b); provided that the parties to the Lease
may take any such action without the consent of the Indenture Trustee
or any Holder to the extent such action relates to the payment of
amounts constituting, or the Owner Trustee's, the Owner Participant's
or the Lessee's rights or obligations with respect to, Excepted
Payments (other than the place, time and manner of payment of any
portion of Basic Rent constituting an Excepted Payment);
(2) modify, amend or supplement the Trust Agreement and any
other Indenture Document (other than the Lease and the Participation
Agreement), or give any consent, waiver, authorization or approval with
respect thereto, in each case only to the extent any such action shall
not materially adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement,
or give any consent, waiver, authorization or approval with respect
thereto, except that without compliance with subsection (a) of this
Section 8.01 the parties to the Participation Agreement shall not
modify, amend or supplement, or give any consent, waiver, authorization
or approval for the purpose of adding provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in
any manner the rights of the respective parties thereunder, with
respect to the following provisions of the Participation Agreement as
in effect on the effective date hereof: Article 6 and Section 10.01(b)
(insofar as such Article 6 and Section 10.01(b) relate to the Indenture
Trustee, the Pass-Through Trustee and the Holders), Article 7 and
Sections 3.05, 15.01, 17.02 and 17.10 and Articles 8 and 9 (insofar as
such Articles relate to the Indenture Trustee; it being understood that
only the Indenture Trustee's consent in respect thereof need be
obtained) and any definition of terms used in the Participation
Agreement, to the extent that any modification of such definition would
result in a modification of the Participation Agreement not permitted
pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in
order to cure any ambiguity, to correct or supplement any provisions
thereof which may be defective or inconsistent with any other provision
thereof or of any provision of this Indenture, or to make any other
provision with respect to matters or questions arising thereunder or
under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided the making of any such other
provision shall not adversely affect the interests of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to subsection
(b) of this Section 8.01 and anything in such subsections or elsewhere in this
Indenture to the contrary notwithstanding, shall, without the consent of the
Holder of each Outstanding Certificate affected thereby, and each Liquidity
Provider,
(1) modify, amend or supplement the Lease in such a way as to
extend the time of payment of Basic Rent or Stipulated Loss Value or
Supplemental Rent payable to the Holders or any Liquidity Provider or
any other amounts payable for the account of the Holders or any
Liquidity Provider (subject in any event to Section 3(e) of the Lease)
upon the occurrence of an Event of Loss or Termination Value and any
other amounts payable for the account of the Holders (subject in any
event to Section 3(e) of the Lease) upon termination of the Lease with
respect to the Aircraft payable under, or as provided in, the Lease as
in effect on the effective date hereof, or reduce the amount of any
installment of Basic Rent or Supplemental Rent so that the same is less
than the payment of principal of, and interest on the Certificates and
Make-Whole Premium, if any, and amounts due to each Liquidity Provider,
as the case may be, to be made from such installment of Basic Rent or
Supplemental Rent, or reduce the aggregate amount of Stipulated Loss
Value, or any other amounts payable under, or as provided in, the Lease
as in effect on the date of the Indenture Supplement upon the
occurrence of an Event of Loss so that the same is less than the
accrued interest on and the principal as of the Loss Payment Date, of
the Certificates at the time Outstanding or reduce the amount of
Termination Value and any other amounts payable under, or as provided
in, the Lease as in effect on the date of the Indenture Supplement upon
termination of the Lease with respect to the Aircraft so that the same
is less than the accrued interest on and principal as of the Lease
Termination Date and Make-Whole Premium, if any, of Certificates at the
time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to,
or consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
absolute and unconditional obligations in respect of payment of Basic
Rent or Supplemental Rent, or Stipulated Loss Value and any other
amounts payable for the account of the Holders (subject in any event to
Section 3(e) of the Lease) upon the occurrence of an Event of Loss, or
Termination Value and any other amounts payable for the account of the
Holders (subject in any event to Section 3(e) of the Lease) with
respect to the Aircraft, payable under, or as provided in, the Lease as
in effect on the date of the Indenture Supplement, except for any such
assignment pursuant to Section 2.12 hereof, and except as provided in
the Lease as in effect on the date of the Indenture Supplement.
(d) At all times so long as this Indenture is in effect, the consent of
the Owner Trustee (at the direction of the Owner Participant) shall be required
in order (i) to amend, modify or supplement the Lease or any other Operative
Document to which the Owner Trustee is a party or to waive compliance by the
Lessee with any of its obligations thereunder and (ii) to grant any consent
requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Section 15 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in Section 15 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving payment
of, any Excepted Payment; provided, however, that if the Owner Trustee is
proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section
15(a)(5), and only Section 15(a)(5), of the Lease.
Section 8.02. Owner Participant's Right to Prepay or Purchase the
Certificates. (a) If (i) an Event of Default shall have occurred and be
continuing or (ii) the Indenture Trustee shall have taken action, or notified
the Owner Participant that it intends to take action, to foreclose the Lien of
this Indenture or otherwise commence the exercise of any significant remedy
under Section 7.02 of this Indenture or Section 15 of the Lease, or (iii) the
Certificates shall have become due and payable pursuant to Section 7.02(b) or
(c) hereof, the Owner Participant (or the Owner Trustee on behalf of the Owner
Participant) may, but shall be under no obligation to do either of the
following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Certificates then Outstanding by notifying the Indenture
Trustee of such election, which notice in order to be effective shall state that
it is irrevocable (except as provided below) and shall designate a Prepayment
Date which shall be a Business Day which shall be not less than 15 days after
the date of such notice on which the Owner Trustee shall, in the manner provided
for in Section 6.04 hereof, deposit the sum of amounts contemplated by paragraph
"first" under Section 5.03 and the aggregate Prepayment Price (determined in
accordance with Section 6.02(b) hereof) of all such Certificates with the
Indenture Trustee. If such payment by the Owner Trustee to the Indenture Trustee
is made, the Certificates shall cease to accrue interest from and after the
Prepayment Date, and after distribution of such payment to the Holders, the
Indenture Trustee shall release the Trust Indenture Estate from the Lien of this
Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which notice
in order to be effective shall state that it is irrevocable (except as provided
below) and shall designate a date which shall be a Business Day which shall be
not less than 15 days after the date of such notice on which the Owner Trustee
shall pay to the Indenture Trustee an amount equal to the aggregate unpaid
principal amount of all Outstanding Certificates, together with accrued interest
on such amount to the date of purchase, plus all other sums due any Holder or
the Indenture Trustee hereunder or under the Participation Agreement or the
Lease, but without any Make-Whole Premium (provided that the Make-Whole Premium
shall be included if the purchase is made pursuant to clause (a)(i) above (but
not pursuant to clause (a)(ii) or (a)(iii) above) when the Event of Default
shall have occurred and been continuing for less than 180 days). Upon receipt by
the Indenture Trustee of such amount, each Holder will be deemed, whether or not
Certificates shall have been delivered to the Indenture Trustee on such date, to
have thereupon sold, assigned, transferred and conveyed (and shall promptly take
such actions as the Owner Participant shall reasonably request to evidence such
sale, assignment, transfer and conveyance) to the Owner Participant (without
recourse or warranty of any kind except for its own acts), all of the right,
title and interest of such Holder in and to the Trust Indenture Estate and this
Indenture and all Certificates held by such Holder and the former Holders shall
not be entitled to receive any interest on the principal amount of such
Certificates after the purchase date, and the Owner Participant shall be deemed
to have assumed (and shall promptly take such actions as any Holder shall
reasonably request to evidence such assumption) all of such Holder's obligations
under the Participation Agreement and this Indenture arising subsequent to such
sale. If the Owner Trustee shall so request, such Holder will comply with all
the provisions of Section 2.06 of this Indenture to enable new Certificates to
be issued to the Owner Participant in such authorized denominations as the Owner
Participant shall request. All charges and expenses required pursuant to Section
2.06 hereof in connection with the issuance of any such new Certificates shall
be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
remedies of the Indenture Trustee under Article VII hereof as well as of the
Lessor under the Lease.
(c) Any election to prepay or purchase the Certificates under this
Section 8.02 shall be irrevocable, provided that if on the specified date for
prepayment or purchase, the Event of Default giving rise to such election shall
no longer be continuing under the Lease such election shall be deemed to be
automatically withdrawn.
Section 8.03. Certain Rights of Owner Participant. (a) If (A) there
shall occur an Event of Default under the Lease as a result of the Lessee's
failure to make any payment of an installment of Basic Rent, and (B) the Owner
Trustee shall have paid or caused to be paid on or prior to the date which is 15
Business Days after the Owner Participant's receipt of written notice of such
Event of Default all principal and interest on the Certificates then due (as
well as any interest on overdue principal and (to the extent permitted by
applicable law) interest), but not including any principal or interest becoming
due on account of such Event of Default, then the failure of the Lessee to make
the payment of such installment of Basic Rent or of interest on account of such
installment's being overdue shall not constitute or result in an Indenture Event
of Default under this Indenture and any declaration based solely on the same
shall be deemed to be automatically rescinded. Nothing contained in the
preceding sentence shall be deemed to entitle the Owner Trustee to exercise any
rights and powers or pursue any remedies pursuant to Article 15 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it or
them under this Indenture by demanding of the Lessee payment of such amount, or
by commencing an action at law or equity against the Lessee for the payment of
such amount or taking appropriate action in a pending action at law against the
Lessee pursuant to Section 15(a)(5), but only said Section 15(a)(5), of the
Lease. Upon curing any such Event of Default pursuant to this Section 8.03, the
Owner Trustee or the Owner Participant, as the case may be, shall be subrogated
on an unsecured basis to all the rights of the Indenture Trustee under the Lease
in respect of the payment giving rise to such Event of Default, and any right to
any interest in respect of the same, and shall be entitled to any payment of
Basic Rent (or interest thereon) actually made by the Lessee in respect of such
cured payment upon receipt by the Indenture Trustee; provided that no such
amount shall be paid to the Owner Trustee or the Owner Participant until all
amounts then due and payable to each Certificate Holder hereunder and thereunder
shall have been paid in full and no Indenture Event of Default shall have
occurred and be continuing. Notwithstanding anything in this Indenture or the
Lease to the contrary, the Owner Participant and the Owner Trustee collectively,
shall not be entitled to cure more than six Events of Default (no more than
three of which may be consecutive) occasioned by defaults in the payment of
Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an installment
of Basic Rent and (B) the Owner Trustee shall have taken or caused to be taken
such action necessary to cure and shall have cured such Event of Default prior
to the date which is 15 Business Days after the Owner Participant's receipt of
the written notice of such Event of Default, then the failure of the Lessee to
perform such covenant, condition or agreement, the observance or performance of
which was accomplished by the Owner Trustee hereunder shall not constitute or
result in an Indenture Event of Default under this Indenture and any declaration
based solely on the same shall be deemed to be automatically rescinded. Nothing
contained in the preceding sentence shall be deemed to entitle the Owner Trustee
or the Owner Participant to exercise any rights and powers or pursue any
remedies pursuant to Section 15 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them in effecting such cure by
demanding of the Lessee payment of such amount, plus any interest due, or by
commencing an action at law or in equity against the Lessee for the payment of
such amount or taking appropriate action in a pending action at law or in equity
against the Lessee pursuant to Section 15(a)(5), but only Section 15(a)(5), of
the Lease. Upon curing any such Event of Default pursuant to this Section
8.03(b), the Owner Trustee or the Owner Participant, as the case may be, shall
be subrogated to all the rights of the Indenture Trustee under the Lease in
respect of the payment, agreement or covenant giving rise to such Event of
Default, and any right to any interest in respect of the same, and shall be
entitled to any payment or other performance upon receipt by the Indenture
Trustee; provided that no such amount shall be paid to the Owner Trustee or the
Owner Participant until all amounts then due and payable to each Certificate
Holder hereunder and thereunder shall have been paid in full and no Indenture
Event of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this Indenture,
and covenants and agrees to perform the same as expressed herein and agrees to
receive and disburse all moneys constituting part of the Trust Indenture Estate
in accordance with the terms hereof.
Section 9.02 Duties Before, and During, Existence of Indenture Event of
Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an Indenture
Event of Default has occurred and has not been cured or waived, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and after
the curing or waiving of all Indenture Events of Default which may have
occurred:
(x) the duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, and
the Indenture Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read in to
this Indenture against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this Indenture;
but in the case of any such statements, certificate or opinions which
by any provision hereof are specifically required to be furnished to
the Indenture Trustee, the Indenture Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Indenture Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action taken or not taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal amount of
Outstanding Certificates relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or exercising
any trust or power conferred upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner Trustee
agrees that it will, at the expense of the Lessee, file or cause to be filed
such continuation statements with respect to financing statements relating to
the security interest created hereunder in the Trust Indenture Estate as may be
specified from time to time in written instructions of the Holders of not less
than 25% in aggregate principal amount of Certificates (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); provided that, notwithstanding the foregoing, the Indenture Trustee may
execute and file or cause to be filed any financing statement which it from time
to time deems appropriate.
(b) If any Event of Default shall have occurred and be continuing and,
after the latest date on which the Owner Trustee may cure such Event of Default
pursuant to Section 8.03 hereof, on request of the Holders of not less than 25%
in aggregate principal amount of outstanding Certificates (unless otherwise
instructed by a greater percentage) and subject to indemnification, to the
extent provided in Sections 7.08 and 9.03 and Article XI hereof, as it may
require against the costs, expenses and liabilities to be incurred, the
Indenture Trustee shall exercise such remedies under Section 15 of the Lease as
shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Article XI hereof or under any other
Operative Agreement) promptly take such action as may be necessary duly to
discharge all Indenture Trustee's Liens on any part of the Trust Indenture
Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee for
filing in accordance with Section 20 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such document,
instrument, financing or continuation statement as evidencing the fact that it
is properly prepared and presented, provided that the Indenture Trustee shall
promptly correct any error in any such document, instrument, financing or
continuation statement of which a Responsible Officer of the Indenture Trustee
has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officer's Certificate
(unless other evidence in respect thereof be herein specifically prescribed)
upon which the Indenture Trustee may rely to prove or establish a matter set
forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default hereunder
and after the curing or waiving of all Indenture Events of Default, the
Indenture Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond, debenture,
note, coupon, security, or other paper or document unless requested in writing
to do so by the Majority in Interest of Certificate Holders; provided that, if
the payment within a reasonable time to the Indenture Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee, not reasonably
assured to the Indenture Trustee by the security afforded to it by the terms of
this Indenture, the Indenture Trustee may require reasonable indemnity against
such costs, expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Owner Trustee or, if
paid by the Indenture Trustee or any predecessor trustee, shall be repaid by the
Owner Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Certificates, or Proceeds.. The Indenture Trustee assumes no responsibility for
the correctness of the recitals contained herein and in the Certificates, except
the Indenture Trustee's certificates of authentication. The Indenture Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Certificates. The Indenture Trustee shall not be accountable for the use
or application by the Owner Trustee of any of the Certificates or of the
proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and receive,
collect, hold and retain collections from the Owner Trustee with the same rights
it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections
5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither the
Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee nor any
agent thereof shall be under any liability for interest on any moneys received
by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall deem
it necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be specifically prescribed herein) may, in the
absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officer's Certificate delivered to the
Indenture Trustee, and such certificate, in the absence of bad faith on the part
of the Indenture Trustee, shall be full warrant to the Indenture Trustee for any
action taken, suffered or omitted by it under the provisions of this Indenture
upon the faith thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any
time and from time to time any Airframe or Engine may, or is required to, be
replaced under Section 3(i), 11(a), or 11(b) 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 9.08 and the provisions of such
Sections of the Lease, 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 without recourse or warranty,
but only upon receipt by or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Owner Trustee will be the
legal owner of and have good title to such Replacement Airframe free
and clear of all Liens except Liens permitted under Section 8 of the
Lease, that such Replacement Airframe will on such date be in at least
as good operating condition and repair as required by the terms of the
Lease, and that such Replacement Airframe has been or, substantially
concurrently with such replacement, will be duly registered in the name
of the Owner Trustee under the Transportation Code or under the law
then applicable to the registration of the Airframe subject to the
Event of Loss and that an airworthiness certificate has been duly
issued under the Aviation Act (or such other applicable law) with
respect to such Replacement Airframe and that such registration and
certificate is, or will be, 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 12 of the Lease is
in full force and effect with respect to such Replacement Airframe;
(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from
this Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe
requested to be released (assuming such Airframe was in the condition
and repair required to be maintained under the Lease);
(vii) that no Event of Default exists or would result from the
making and granting of the request for release and the addition of a
Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of the Indenture in contravention
of any of the provisions of this Indenture;
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 11(a)(1)
of the Lease with respect to such Replacement Airframe has been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss including the manufacturer's
serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Owner Trustee will be the legal
owner of such Replacement Engine free and clear of all Liens except
Liens permitted under Section 8 of the Lease, and that such Replacement
Engine will on such date be in at least as good operating condition and
repair as required by the terms of the Lease and will otherwise conform
to the requirements set forth in the definition of "Replacement
Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining
until the next scheduled maintenance visit, and assuming such Engine
was in the condition and repair required to be maintained under the
Lease);
(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in contravention of
any of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 11(a) or 11(b) of the Lease with
respect to such Replacement Engine has been satisfied.
(3) 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, if
any, generally available with respect to such Replacement Airframe or
Replacement Engine, and a supplement to this Indenture subjecting such
Replacement Airframe or Replacement Engine to the Trust Agreement and to the
Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the Owner
Trustee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special counsel to the
Lessee, and of Special Aviation Counsel, or (in either case) other counsel
reasonably satisfactory to the Indenture Trustee, stating that:
(i) 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 properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with; and
(ii) 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
Transportation Code or any other law then applicable to the
registration of the Aircraft, 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 Airframe or Replacement Engine and
the Indenture Trustee would be entitled to the benefits of Section 1110
of the Bankruptcy Code with respect to such Replacement Airframe or
Replacement Engine, provided, that such opinion need not be to the
effect specified in the foregoing clause to the extent that the
benefits of such Section 1110 would not have been, by reason of a
change in law or governmental interpretation thereof after the date
hereof, available to the Indenture Trustee with respect to the Aircraft
immediately prior to such substitution had such Event of Loss not
occurred.
Section 9.09 Indenture Supplement for Replacements. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree
for the benefit of the Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver a supplement to this
Indenture as contemplated by Section 9.08(3) hereof and, provided no Event of
Default shall have occurred and be continuing, execute and deliver to the Lessee
an appropriate instrument releasing the Airframe or Engine being replaced from
the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the substitution
of a Replacement Airframe or a Replacement Engine as contemplated by Section 11
of the Lease and Section 9.08 hereof, 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 any Event of Loss with respect to the
Airframe or Engine or Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees to
pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances, expenses
and disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment of
such compensation, advances, expenses and disbursements to the extent that such
compensation, advances, expenses and disbursements shall not be paid by the
Lessee, and shall have the right to use or apply any moneys held by it hereunder
in the Trust Indenture Estate toward such payments; provided that, so long as
the Lease is in effect, the Indenture Trustee shall not make any claim for
payment under this Section 9.11 against the Owner Trustee without first making
demand on the Lessee for payment of such claim. The Indenture Trustee agrees
that it shall have no right against any Holder, SSB, or the Owner Participant
for any fee as compensation for its services as trustee under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 9.02 and 9.03 hereof)
conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in
the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Certificates shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner Trustee,
the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee,
the Paying Agent, if any, the Registrar and the Lessee shall deem and treat the
Person in whose name such Certificate shall be registered upon the Register as
the absolute owner of such Certificate (whether or not such Certificate shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest on such Certificate and
for all other purposes; and neither the Owner Trustee nor the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee) nor the Paying
Agent, if any, nor the Registrar nor the Lessee shall be affected by any notice
to the contrary. All such payments so made to any such person, or upon his
order, shall be valid, and, to the extent of the sum or sums so paid, effectual
to satisfy and discharge the liability for moneys payable upon any such
Certificate.
Section 10.04. Certificates Owned by Owner Trustee or Lessee Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Certificates have concurred in any direction, consent or
waiver under this Indenture, Certificates which are owned by the Owner Trustee,
any Owner Participant, SSB, the Lessee or any Affiliate thereof shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Indenture Trustee has actual
knowledge that certain Certificates are so owned by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Owner Trustee, such Owner Participant, SSB or the Lessee shall
such Certificates be so disregarded; and provided further that if all
Certificates which would be deemed Outstanding in the absence of the foregoing
provision are owned by the Owner Trustee, SSB or any Owner Participant or by any
Affiliate thereof, then such Certificates shall be deemed Outstanding for the
purpose of any such determination. Certificates so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Certificates and that the pledgee is not the Owner Trustee, the Owner
Participant, SSB or the Lessee or any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Owner
Trustee, the Owner Participant, SSB or the Lessee. In case of a dispute as to
such right, the advice of counsel shall be full protection in respect of any
decision made by the Indenture Trustee in accordance with such advice, unless
the Lessee, the Owner Trustee, SSB, or the Owner Participant are actually named
in the Register. Upon request of the Indenture Trustee, the Owner Trustee, the
Owner Participant, SSB and the Lessee shall furnish to the Indenture Trustee
promptly an Officer's Certificate listing and identifying all Certificates, if
any, known by the Owner Trustee, the Owner Participant, SSB or the Lessee to be
owned or held by or for the account of any of the above-described persons; and,
subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be
entitled to accept such Officer's Certificate as conclusive evidence of the
facts set forth therein and of the fact that all Certificates not listed therein
are outstanding for the purpose of any such determination.
Section 10.05. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 10.01, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Certificates specified in this Indenture in
connection with such action, any Holder of a Certificate, the serial number of
which is shown by the evidence to be included among the serial numbers of the
Certificates the Holders of which have consented to such action, may, by filing
written notice at the Corporate Trust Department and upon proof of holding as
provided in this Article, revoke such action so far as concerns such
Certificate. Except as aforesaid, any such action taken by the Holder shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Certificate and of any Certificates issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Certificate or otherwise. Any action taken by the Holders of the
percentage in aggregate principal amount of the Certificates specified in this
Indenture in connection with such action shall be conclusively binding upon the
Owner Trustee, the Indenture Trustee and the Holders of all the Certificates.
Section 10.06. ERISA. Any Person, other than the Subordination Agent,
any Pass-Through Trustee, and any pass-through trustee in respect of
pass-through certificates, if any, issued in accordance with Section 15.01 of
the Participation Agreement, who is acquiring the Certificates will be deemed to
represent and warrant that (i) no assets of an employee benefit plan subject to
Title I of ERISA or an individual retirement account or plan subject to Section
4975 of the Code, or any trust established under any such plan or account, have
been used to acquire or hold any of the Certificates, or (ii) that one or more
administrative or statutory exemptions from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code applies to its purchase
and holding of the Certificates such that its purchase and holding of the
Certificates will not result in a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as Owner
Trustee under the Trust Agreement, hereby agrees, whether or not any of the
transactions contemplated hereby shall be consummated, to assume liability for,
and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its services
under this Indenture and any taxes excluded from the Lessee's indemnity
obligation under Section 8.01(b) of the Participation Agreement), claims,
actions, suits, costs, expenses or disbursements (including legal fees and
expenses) of any kind and nature whatsoever which may be imposed on, incurred by
or asserted against the Indenture Trustee (whether or not also agreed to be
indemnified against by any other person under any other document) in any way
relating to or arising out of this Indenture, or any other Indenture Documents
or the enforcement of any of the terms of any thereof, or in any way relating to
or arising out of the manufacture, purchase, acceptance, nonacceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of the Aircraft or any Engine (including,
without limitation, latent and other defects, whether or not discoverable, and
any claim for patent, trademark or copyright infringement), or in any way
relating to or arising out of the administration of the Trust Indenture Estate
or the action or inaction of the Indenture Trustee hereunder, except only (a) in
the case of willful misconduct or gross negligence of the Indenture Trustee in
the performance of its duties hereunder, (b) as may result from the inaccuracy
of any representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 8 or Article 9 of the Participation
Agreement from the Lessee's general indemnity or general tax indemnity to the
Indenture Trustee under said Article; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Article XI for
any claim or expense indemnified by the Lessee under the Participation Agreement
without first making demand on the Lessee for payment of such claim or expense.
The Indenture Trustee shall be entitled to indemnification, from the Trust
Indenture Estate, for any liability, obligation, loss, damage, penalty, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to this
Article XI to the extent not reimbursed by the Lessee or others, but without
releasing any of them from their respective agreements of reimbursement; and to
secure the same the Indenture Trustee shall have a prior Lien on the Trust
Indenture Estate. The indemnities contained in this Article XI shall survive the
termination of this Indenture and the resignation or removal of the Indenture
Trustee. Upon payment in full by the Owner Trustee of any indemnity pursuant to
this Article XI, the Owner Trustee shall, so long as no Indenture Event of
Default shall have occurred and be continuing, be subrogated to the rights of
the Indenture Trustee, if any, in respect of the matter as to which the
indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. 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.
Section 12.02. Resignation and Removal 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 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, the Majority in Interest of the
Certificate Holders or the Owner Trustee, with the consent of the Lessee and the
Majority in Interest of the Certificate Holders may at any time remove the
Indenture Trustee without cause by an instrument in writing delivered to the
Lessee, the Owner Trustee, the Owner Participant, and the Indenture Trustee, and
the Indenture Trustee shall promptly notify each Holder thereof of such action
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, the Majority in Interest of the Certificate Holders, or
the Owner Trustee, with the consent of the Lessee and the Majority in Interest
of the Certificate Holders, may appoint a successor Indenture Trustee by an
instrument signed by such Holders. If a successor Indenture Trustee shall not
have been appointed within 30 days after such notice of resignation or removal,
the Indenture Trustee, the Owner Trustee, the Lessee, the Owner Participant, or
any Holder 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 provided above. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail
to resign after written request therefor by the Owner Trustee or by any
Holder; or
(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or
liquidator of the Indenture Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Indenture Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent of
the Lessee, appoint a successor trustee by written instrument, in duplicate,
executed by a Responsible Officer of the Owner Trustee, one copy of which
instrument shall be delivered to the Indenture Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 7.13 hereof,
any Holder who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Indenture Trustee and
appoint a successor trustee, which removal and appointment shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.04 hereof. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above within one year from the date of
appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.
There shall at all times be an Indenture Trustee hereunder which shall be (i)(x)
a bank or trust company organized and doing business under the laws of the
United States of America or any state or the District of Columbia having a
combined capital and surplus of at least $100,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or indirect
parent thereof having a combined capital and surplus of at least $100,000,000
and (ii) a Citizen of the United States authorized under applicable law to
exercise corporate trust powers and subject to supervision of examination by
Federal, state or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Indenture Trustee shall resign immediately in the manner and with the effect
specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee an
instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein; but, nevertheless, on the
written request of the Owner Trustee or of the successor trustee, upon payment
of its charges then unpaid, the trustee ceasing to act shall, subject to Section
14.04 hereof, pay over to the successor trustee all moneys at the time held by
it hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon request
of any such successor trustee, the Owner Trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear in
the Register, and shall mail a copy of such notice to the Lessee and the Owner
Trustee. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 12.02 hereof.
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee. 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 succeeding to the corporate trust
business of the Indenture Trustee, shall be the successor to the Indenture
Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Certificates so authenticated; and, in case at that
time any of the Certificates shall not have been authenticated, any successor to
the Indenture Trustee may authenticate such Certificates either in the name of
any predecessor hereunder or in the name of the successor Indenture Trustee; and
in all such cases such certificate shall have the full force which it is
anywhere in the Certificates or in this Indenture provided that the certificate
of the Indenture Trustee shall have; provided, that the right to adopt the
certificate of authentication of any predecessor Indenture Trustee or to
authenticate Certificates in the name of any predecessor Indenture Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. 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 Trust 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, the Indenture Trustee, by an instrument in writing signed by it, may
appoint one or more individuals or corporations to act as a separate trustee or
separate trustees or co-trustee, acting jointly with the Indenture Trustee, of
all or any part of the Trust Indenture Estate, to the full extent that local law
makes it necessary for such separate trustee or separate trustees or co-trustee
acting jointly with the Indenture Trustee to act.
(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. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he or they shall be vested with such title to the Trust Indenture Estate or any
part thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, 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, powers, duties and obligations shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or his
behalf and in its or his name. In case any such separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, the title to the
Trust Indenture Estate and all assets, property, rights, powers, duties and
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 (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate 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 moneys 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 and exercised or performed by the Indenture Trustee and such
additional trustee or trustees and separate trustee or trustees 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, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or exercisable by, any such
additional trustee or separate trustee shall be exercised hereunder by
such additional trustee or separate trustee except jointly with, or
with the consent of, the Indenture Trustee; and
(iv) no trustee hereunder shall be liable either personally or
in its capacity as such trustee, 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate 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 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders. The
Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or assets to the Indenture Trustee
as security for the Certificates;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner Trustee
herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture Event
of Default permitting the enforcement of all or any of the several remedies
provided herein; provided, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such an Indenture Event of Default or may limit the
remedies available to the Indenture Trustee upon such an Indenture Event of
Default or may limit the right of not less than the Majority in Interest of
Certificate Holders to waive such an Indenture Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Owner
Trustee may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subject to the
Lien of this Indenture or to subject any Replacement Airframe or Replacement
Engine to the Lien of this Indenture in accordance with the provisions hereof or
with the Lease or to release from the Lien of this Indenture property that has
been substituted on or removed from the Aircraft as contemplated in Section 3.07
hereof; provided that supplements to this Indenture entered into for the purpose
of subjecting any Replacement Airframe or Replacement Engine to the Lien of this
Indenture need only be executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Certificates in
coupon form (including Certificates registrable as to principal only) and to
provide for exchangeability of such Certificates with Certificates issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section 6.03(b) of the Participation
Agreement;
(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders; and
(j) to effect the amendments contemplated by Section 2.03 of the
Participation Agreement and/or Section 2.18 hereof, subject to the limitations
set forth therein.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any such supplemental indenture may be executed without the consent of
the Holders of Outstanding Certificates, notwithstanding any of the provisions
of Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders. With
the consent (evidenced as provided in Article X) of the Majority in Interest of
Certificate Holders, the Owner Trustee (when authorized by the Owner
Participant) and the Indenture Trustee may, from time to time and at any time,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders; provided, however, that, without the
consent of each and every Holder and each Liquidity Provider, no such amendment
of or supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Certificate or reduce the interest payable on any Certificate (except that
only the consent of the Holder shall be required for any decrease in any amounts
of or the rate of interest payable on such Certificate or any extension for the
time of payment of any amount payable under such Certificate), or alter or
modify the provisions of Article V hereof with respect to the order of
priorities in which distributions thereunder shall be made as among Holders of
different Series of Certificates or as between the Holder and the Owner Trustee
or the Owner Participant or with respect to the amount or time of payment of any
such distribution, or alter or modify the circumstances under which a Make-Whole
Premium shall be payable, or alter the currency in which any amount payable
under any Certificate is to be paid, or impair the right of any Holder to
commence legal proceedings to enforce a right to receive payment hereunder, (c)
reduce, modify or amend any indemnities in favor of any Holder or in favor of or
to be paid by the Owner Participant (except as consented to by each Person
adversely affected thereby), or (d) create or permit the creation of any Lien on
the Trust Indenture Estate or any part thereof prior to or pari passu with the
Lien of this Indenture, except as expressly permitted herein, or deprive any
Holder of the benefit of the Lien of this Indenture on the Trust Indenture
Estate, except as provided in Section 7.02 hereof or in connection with the
exercise of remedies under Article VII. This Section 13.02 shall not apply to
any indenture or indentures supplemental hereto permitted by, and complying with
the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the provisions
of this Section, the Indenture Trustee shall mail a notice thereof by
first-class mail to the Holders at their addresses as they shall appear on the
registry books of the Registrar, setting forth in general terms the substance of
such supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Indenture Trustee, the Owner Trustee, the Lessee and
the Holders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officer's Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures. Certificates authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Indenture Trustee as to any matter provided for
by such supplemental indenture. If the Owner Trustee or the Indenture Trustee
shall so determine, new Certificates so modified as to conform, in the opinion
of the Owner Trustee and the Indenture Trustee, to any modification of this
Indenture contained in any such supplemental indenture may be prepared by the
Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange
for the Outstanding Certificates.
Section 13.06. No Request Necessary for Lease Supplement or Indenture
Supplement. Notwithstanding anything contained in Section 13.02 hereof, no
written request or consent of the Indenture Trustee, any Holder or the Owner
Participant pursuant to Section 13.02 hereof shall be required to enable the
Owner Trustee to enter into any supplement to the Lease with the Lessee in
accordance with the terms and conditions of the Lease to subject a Replacement
Airframe or Replacement Engine thereto or to execute and deliver any supplement
to the Indenture (including the Indenture Supplement) pursuant to the terms
hereof.
Section 13.07. Notices to Liquidity Providers. Any request made to any
Holder for consent to any amendment, supplement or waiver pursuant to Section
7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture
Trustee to each Liquidity Provider.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture: Termination of
Indenture. If at any time after (a) the Owner Trustee shall have paid or caused
to be paid the principal of and interest on all the Certificates outstanding
hereunder, as and when the same shall have become due and payable, or (b) the
Owner Trustee shall have delivered to the Indenture Trustee for cancellation all
Certificates theretofore authenticated (other than any Certificates which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.07 hereof) or (c) (i) all such Certificates not
theretofore delivered to the Indenture Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for prepayment within one year under arrangements
satisfactory to the Indenture Trustee for the giving of notice of prepayment by
the Indenture Trustee in the name and at the expense of the Owner Trustee, and
(ii) the Owner Trustee shall have irrevocably deposited or caused to be
deposited with the Indenture Trustee as trust funds the entire amount in cash
(other than moneys repaid by the Indenture Trustee or any paying agent to the
Owner Trustee in accordance with Section 14.04 hereof) or Government obligations
maturing as to principal and interest in such amounts and at such times as will
insure the availability of cash sufficient to pay at maturity all such
Certificates not theretofore delivered to the Indenture Trustee for
cancellation, including principal and interest due or to become due to such date
of maturity as the case may be, and if, in any such case, the Owner Trustee
shall also pay or cause to be paid all other sums then payable hereunder by the
Owner Trustee, then this Indenture shall cease to be of further effect (except
in the case of (c) above as to (A) rights of registration of transfer and
exchange, and the Owner Trustee's right of optional prepayment pursuant to
Section 6.02(a)(ii) hereof, (B) substitution of mutilated, defaced, destroyed,
lost or stolen Certificates, (C) rights of Holders to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), (D) the rights, obligations, indemnities
and immunities of the Indenture Trustee hereunder, and (E) the rights of the
Holders as beneficiaries hereof with respect to the property so deposited with
the Indenture Trustee payable to all or any of them), and the Indenture Trustee,
on demand of the Owner Trustee accompanied by an Officer's Certificate and an
Opinion of Counsel (covering such matters reasonably requested by, and in form
and substance reasonably satisfactory to, the Indenture Trustee) and at the cost
and expense of the Owner Trustee, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture. The Owner Trustee agrees to
reimburse and indemnify the Indenture Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Indenture
Trustee for any services thereafter reasonably and properly rendered by the
Indenture Trustee in connection with this Indenture or the Certificates.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Certificates, and
provided that there shall then be no other amounts due to the Indenture Trustee
hereunder or under the Participation Agreement 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 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 Trustee to give effect to such release;
provided, however, that this Indenture and the trusts created hereby shall
terminate earlier 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
forming a part of the Trust Indenture Estate and the final distribution by the
Indenture Trustee of all moneys or other property or proceeds constituting part
of the Trust 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 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Certificates. Subject to Section 14.04 hereof, all moneys deposited
with the Indenture Trustee pursuant to Section 14.01 hereof shall be held in
trust and applied by it to the prompt payment, either directly or through any
Paying Agent, to the Holders of the particular Certificates for the payment or
prepayment of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal, interest and Make-Whole
Premium, if any, but such money need not be segregated from other funds except
to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any Paying
Agent under the provisions of this Indenture shall, upon demand of the Owner
Trustee, be repaid to it or paid to the Indenture Trustee and thereupon such
Paying Agent shall be released from all further liability with respect to such
moneys.
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee
and Paying Agent.. Any moneys deposited with or paid to the Indenture Trustee or
any Paying Agent for the payment of the principal of or interest or Make-Whole
Premium on any Certificate and not applied but remaining unclaimed for two years
and eleven months after the date upon which such principal, interest or
Make-Whole Premium shall have become due and payable, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be paid to the Owner Trustee (or, if the Trust Agreement shall no
longer be in effect, to the Owner Participant) by the Indenture Trustee or such
Paying Agent and the Holder of such Certificate, as a general unsecured
creditor, shall, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property laws, thereafter look only to the
Owner Trustee (or the Owner Participant) for any payment which such Holder may
be entitled to collect, and all liability of the Indenture Trustee, or any
Paying Agent with respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of SSB (or its permitted
successors or assigns) and FNBM acts hereunder not in its individual capacity
but solely as trustee except as expressly provided herein and in the other
Operative Documents, and, in the case of SSB (or its permitted successors or
assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders. No
Holder shall have legal title to any part of the Trust Indenture Estate. No
transfer, by operation of law or otherwise, of any Certificate or other right,
title and interest of any Holder in and to the Trust Indenture Estate or
hereunder shall operate to terminate this Indenture or entitle such Holder 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 Trust Indenture Estate.
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding. Any sale or other conveyance of all or any part of the Trust Indenture
Estate by the Indenture Trustee made pursuant to the terms of this Indenture or
of the Lease shall bind the Lessee, the Owner Trustee, the Holders and the Owner
Participant and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders therein and thereto. 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 15.04. Indenture Benefits Trustees, Participants, Lessee, and
Liquidity Providers Only. Nothing in this Indenture, whether express or implied,
shall be construed to give to any person other than SSB, the Owner Trustee, the
Lessee, FNBM, the Indenture Trustee, the Owner Participant, each Liquidity
Provider and the Holders any legal or equitable right, remedy or claim under or
in respect of this Indenture. Upon termination of this Indenture pursuant to
Article XIV hereof, the Indenture Trustee in connection with the satisfaction of
the Indenture shall return to the Owner Trustee all property (and related
documents and instruments) constituting or evidencing the Trust Indenture
Estate.
Section 15.05. 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
affirmative acts that interfere with the peaceful and quiet possession and
enjoyment of the Aircraft by the Lessee or any Permitted Sublessee.
Section 15.06. 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 shall
be given and become effective in the manner set forth in Section 14.01 of the
Participation Agreement. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Indenture.
Section 15.07. Officer's Certificates and Opinions of Counsel.. Upon
any application or demand by the Lessee or the Owner Trustee to the Indenture
Trustee to take any action under any of the provisions of this Indenture, the
Lessee or the Owner Trustee, as the case may be, shall furnish to the Indenture
Trustee upon request (a) an Officer's Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and that the proposed action is in conformity with the
requirements of this Indenture, and (b) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Any certificate, statement or opinion of an officer of SSB may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters information with respect to which is in the possession of the
Lessee or SSB, upon the certificate, statement or opinion of or representations
by an officer or officers of the Lessee or SSB, as the case may be, unless such
counsel knows that the certificate, statement or opinion or representations with
respect to the matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
SSB or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants employed by the Lessee or the Owner Trustee, as the case may
be, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that such
firm is independent.
Section 15.08. 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 15.09. No Oral Modifications or Continuing Waivers. No terms or
provisions of this Indenture or the Certificates 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 waiver of the terms hereof or of any
Certificate shall be effective only in the specific instance and for the
specific purpose given.
Section 15.10. 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 permitted assigns of each, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by any Holder shall bind the successors and assigns of such Holder. This
Indenture and the Trust 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.
Section 15.11. 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 15.12. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Owner Participant, the Indenture
Trustee and any Holder, or any bank or other affiliate of any such party, may
conduct any banking or other financial transactions, and have banking or other
commercial relationships, with the Lessee fully to the same extent as if this
Indenture were not in effect, including without limitation the making of loans
or other extensions of credit to the Lessee for any purpose whatsoever, whether
related to any of the transactions contemplated hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE AND EACH
CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture
and Security Agreement to be duly executed this ___th day of September, 1997 by
their respective officers thereunto duly authorized and acknowledge that this
Indenture has been made and delivered in the State of New York.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not
in its individual capacity,
except as specifically set
forth herein but solely as
Owner Trustee
By
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity, but solely as Indenture Trustee
By
Name:
Title:
9
Exhibit A
to
Trust Indenture and
Security Agreement
Indenture Supplement No. 1
This Indenture Supplement No. 1 (Atlantic Coast Airlines Trust No.
___________) dated ____________, 199_, of State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, not in its
individual capacity but solely as owner trustee (herein called the "Owner
Trustee") under the Trust Agreement dated as of September __, 1997 (the "Trust
Agreement") between State Street Bank and Trust Company and the Owner
Participant named therein,
WITNESSETH:
WHEREAS, the Trust Agreement provides for the execution and delivery of
this Indenture Supplement which shall particularly describe the Aircraft
included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture and Security Agreement (Atlantic Coast
Airlines Trust No. __________) dated as of September 26, 1997 (the "Indenture")
between the Owner Trustee and The First National Bank of Maryland (herein called
the "Indenture Trustee") provides for the execution and delivery of an Indenture
Supplement substantially in the form of this Indenture Supplement No. 1, which
Supplement shall particularly describe the Aircraft included in the Trust
Indenture Estate, and shall specifically mortgage such Aircraft to the Indenture
Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines
described in the following paragraph and a counterpart of the Indenture is
attached to and made a part of this Indenture Supplement No. 1, and this
Indenture Supplement No. 1, together with such attachment, is being filed for
recordation on or promptly after the date of this Supplement No. 1 with the
Federal Aviation Administration as one document.
NOW, THEREFORE, this Supplement witnesseth, that, to secure the prompt
payment of the principal of and Make-Whole Premium, if any, and interest on, and
all other amounts due with respect to, all Outstanding Certificates under the
Indenture and all other amounts due hereunder and the performance and observance
by the Owner Trustee of all the agreements, covenants and provisions for the
benefit of the Holders contained in the Indenture, in the Lease, in the
Participation Agreement and the Certificates, and the prompt payment of any and
all amounts from time to time owing under the Participation Agreement by the
Owner Trustee, the Owner Participant or the Lessee to the Holders and for the
uses and purposes and subject to the terms and provisions of the Indenture and
the Certificates, and in consideration of the premises and of the covenants
contained in the Indenture, and of the purchase of the Certificates by the
Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee
at or before the delivery of the Indenture, the receipt of which is hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged, granted a security interest in, and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge, grant a security interest in, and confirm, unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable security
and benefit of the Holders, in the trust created by the Indenture, and subject
to all of the terms, conditions, provisions and limitations set forth in the
Indenture, a first priority security interest in and mortgage lien on all
estate, right, title and interest of the Owner Trustee in, to and under the
following described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
Canadair CL600-2B19 N___ ____________
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Owner Trustee and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
General Electric CF34-3B1
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property owned by the Owner Trustee which
shall hereafter become physically attached to or incorporated in the property
described above, 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, 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, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth in
the Indenture, all of the estate, right, title and interest of the Owner Trustee
in, to and under the Lease Supplement (other than Excepted 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 Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This 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.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft
(including Engines) referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of the
Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture
Supplement No. 1 to be duly executed as of the date first written above by one
of its officers thereunto duly authorized.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not
in its individual capacity,
except as specifically set
forth herein, but solely as
Owner Trustee
By
Name:
Title:
Exhibit B
to
Trust Indenture and
Security Agreement
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. _________ $____________
EQUIPMENT TRUST CERTIFICATE
(Atlantic Coast Airlines Trust No. __________)
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Atlantic Coast Airlines Trust No. __________)
dated as of September __, 1997
SERIES _____
Interest Rate Maturity
___% ____________, ▇___
▇▇▇▇▇ ▇▇▇▇▇▇ Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement (Atlantic Coast Airlines Trust No. _________)
dated as of September __, 1997, between the Owner Participant named therein and
State Street Bank and Trust Company of Connecticut, National Association (herein
as such Trust Agreement may be amended or supplemented from time to time called
the "Trust Agreement"), hereby promises to pay to The First National Bank of
Maryland, as Subordination Agent, or its registered assigns, the principal sum
of ______________________ ________________ Dollars, payable as set forth below
for the Maturity specified above, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest on the principal outstanding from
time to time, semiannually on each January 1 and July 1, on such principal sum
in like coin or currency at the rate per annum set forth above from the January
1 or the July 1, as the case may be, next preceding the date of this Certificate
to which interest on the Certificates has been paid or duly provided for, unless
the date hereof is a date to which interest on the Certificates has been paid or
duly provided for, in which case from the date of this Certificate.
Notwithstanding the foregoing, if the date hereof is after any January 1 or July
1 and before the following January 1 or July 1, as the case may be, this
Certificate shall bear interest from such January 1 or July 1; provided that, if
the Owner Trustee shall default in the payment of interest due on such January 1
or July 1, then this Certificate shall bear interest from the next preceding
January 1 or July 1 to which interest on this Certificate has been paid or duly
provided for. The interest so payable on any January 1 or July 1 will, except as
otherwise provided in the Indenture referred to below, be paid to the person in
whose name this Certificate is registered at the close of business on the
December 15 or June 15 preceding such January 1 or July 1, whether or not such
day is a Business Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable
at the office or agency of The First National Bank of Maryland (the "Indenture
Trustee") maintained for such purpose in immediately available funds prior to
10:30 A.M. (New York time) on the due date thereof and the Indenture Trustee
shall remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 10:30 A.M. New York
time by the Indenture Trustee on any Business Day, by 12:00 noon New York time
on such Business Day; otherwise, the Indenture Trustee shall make payment
promptly, but not later than 11:00 A.M. New York time on the next succeeding
Business Day; provided that, at the option of the Indenture Trustee or its
Paying Agent, interest may be paid by mailing a check therefor payable to or
upon the written order of the registered holder entitled thereto at his last
address as it appears on the Register. If any amount payable under this
Certificate, or under the Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
State Street Bank and Trust Company of Connecticut, National
Association, and The First National Bank of Maryland are not acting individually
hereunder, but solely as Owner Trustee and Indenture Trustee, respectively.
Any Person, other than the Subordination Agent, any Pass-Through
Trustee and any pass-through trustee in respect of pass-through certificates, if
any, issued in accordance with Section 15.01 of the Participation Agreement, who
is acquiring the Certificates will be deemed to represent and warrant that (i)
no assets of an employee benefit plan subject to Title I of ERISA or an
individual retirement account or plan subject to Section 4975 of the Code, or
any trust established under any such plan or account, have been used to acquire
or hold any of the Certificates, or (ii) that one or more administrative or
statutory exemptions from the prohibited transaction rules under Section 406 of
ERISA and Section 4975 of the Code applies to its purchase and holding of the
Certificates such that its purchase and holding of the Certificates will not
result in a non-exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code.
This Certificate is one of a duly authorized issue of Certificates
issued and to be issued under the Trust Indenture and Security Agreement
(Atlantic Coast Airlines Trust No. _________) dated as of September 26, 1997
(herein as amended, supplemented or modified from time to time called the
"Indenture") between the Owner Trustee and the Indenture Trustee, designated as
Equipment Trust Certificates (Atlantic Coast Airlines Trust No. ________)
limited in aggregate initial principal amount to $_______________ consisting of
the following aggregate principal amounts of Certificates with the interest
rates per annum and Maturities shown:
Initial
Aggregate
Principal
Series Maturity Amount Interest Rate
A
B
C
D
Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its principal
corporate trust office) for a more complete statement of the terms and
provisions thereof, including a statement of the properties conveyed, pledged
and assigned thereby, the nature and extent of the security, the respective
rights of the Owner Trustee, the Owner Participant, the Lessee, the Indenture
Trustee and the Holders, and the terms upon which the Certificates are, and are
to be, executed and delivered, to all of which terms and conditions in the
Indenture each Holder hereof agrees by its acceptance of this Certificate.
Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Indenture.
The principal amounts of the Certificates are payable as set forth in
Schedule I attached hereto, which schedule is subject to amendment as provided
in Section 2.18 of the Indenture. The Certificates are subject to redemption in
part, pro rata (based on the face amount thereof), in each case through
mandatory sinking fund redemptions providing for the redemption on the Sinking
Fund Redemption Dates of the aggregate principal amounts set forth below,
together with interest accrued thereon to the applicable Sinking Fund Redemption
Date, but without Make-Whole Premium.
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be made
to the Holder hereof by or at the behest of the Owner Trustee hereunder or under
the Indenture shall be made only from the income and proceeds from the Lessor's
Estate to the extent included in the Trust Indenture Estate and only to the
extent that the Owner Trustee shall have sufficient income or proceeds from the
Lessor's Estate to the extent included in the Trust Indenture Estate to enable
the Indenture Trustee to make such distributions in accordance with the terms of
the Indenture; provided that under the Lease, the Lessee is obligated to pay or
cause to be paid, to the extent such payments are not required to be made from
the assets subject to the Lien of this Indenture or the income and proceeds
received by the Indenture Trustee therefrom, any net loss arising from the
investment of funds held by the Indenture Trustee which but for an Event of
Default would be payable to Lessee, and each Holder hereof, by its acceptance of
this Certificate, agrees that it will (except as aforesaid) look solely to the
income and proceeds from the Trust Indenture Estate to the extent available for
distribution to the Holder hereof as provided above and that neither the Owner
Participant, nor the Owner Trustee, nor State Street Bank and Trust Company of
Connecticut, National Association, nor the Indenture Trustee is personally
liable to the Holder hereof for any amounts payable or any liability under this
Certificate or under the Indenture, except as expressly provided in the
Indenture, in the case of State Street Bank and Trust Company of Connecticut,
National Association, the Owner Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the following
circumstances at the price determined as set forth below.
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11(a)(1) of the Lease and Section 9.08 of
the Indenture replacement equipment is substituted therefor).
(ii) If the Lessee, pursuant to Section 16 of the Lease, gives notice
of purchase of the Aircraft (and the Lessee shall not have revoked such notice
or effected an assumption of the Certificates as provided in Section 2.12 of the
Indenture).
(iii) If the Owner Participant, or the Owner Trustee on behalf of the
Owner Participant, gives notice of prepayment to the Indenture Trustee pursuant
to Section 8.02 of the Indenture.
(iv) If the Lessee, pursuant to Section 3(g) of the Lease, gives notice
of a voluntary termination for obsolescence or surplus, but subject to Section
6.02(c) of Indenture.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a Refinancing of the Certificates.
(vi) As contemplated by Section 2.16 of the Indenture and Section
3.05(b) of the Participation Agreement if the Delivery Date has not occurred on
or prior to the Cut-Off Date.
(vii) At the option of the Owner Trustee with the prior written consent
of the Lessee and the Owner Participant upon not less than 25 days' prior
written notice.
(viii) If a Triggering Event (as defined in the Intercreditor
Agreement) occurs prior to the earliest of (A) the Delivery Date, (B) the date
the obligations of the Owner Trustee under the Certificates are assumed by the
Lessee pursuant to Section 3.05(a) of the Participation Agreement and (iii) the
Cut-Off Date.
In the case of a prepayment of the Certificates pursuant to clauses
(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the
terms (including timing of notice) of Section 3(g) or Section 16 of the Lease or
Article 15 of the Participation Agreement, as the case may be, shall give
irrevocable (subject to Section 6.02(c) of the Indenture) written notice to the
Owner Trustee and the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Owner Trustee is directed
to prepay the Certificates. In the case of a prepayment pursuant to clause (i)
above, the Certificates shall be prepaid on the Loss Payment Date (as defined in
Section 11(a)(2) of the Lease). In the case of a prepayment pursuant to clause
(iii) above, the Certificates shall be prepaid on the date designated in the
notice of prepayment required by Section 8.02 of the Indenture. In the case of a
prepayment of the Certificates pursuant to clauses (ii) and (iv) above, the
Certificates shall be prepaid in full on the Termination Date. In the case of a
prepayment of the Certificates pursuant to clause (v) above, the Certificates
shall be prepaid on the effective date of the Refinancing. In the case of a
prepayment of the Certificates pursuant to clause (vi) above, the Certificates
shall be prepaid on the 15th day following the Cut-Off Date. In the case of a
prepayment of the Certificates pursuant to clause (vii) above, the Certificates
shall be prepaid on the date designated in the notice referred to therein. In
the case of a prepayment of the Certificates pursuant to Section 6.02(a)(viii)
above, the Certificates shall be prepaid on the Special Distribution Date (as
defined in the Intercreditor Agreement) as provided in Section 2.4(b)(ii) of the
Intercreditor Agreement. The day on which the Certificates are to be prepaid is
herein referred to as the "Prepayment Date". On or prior to the Prepayment Date,
immediately available funds shall be deposited with the Indenture Trustee in an
amount in respect of the Certificates equal to:
(1) if such prepayment is made pursuant to clause (i), (iii)
(if clause (i), but not clause (ii) or clause (iii) of the first
sentence of Section 8.02(a) of the Indenture is applicable and such
prepayment is made when an Event of Default has occurred and been
continuing for 180 days or more or if clause (ii) or clause (iii) of
the first sentence of Section 8.02(a) hereof is applicable), (vi) or
(viii) above, the sum of (A) the aggregate principal amount of such
Certificates then Outstanding, (B) accrued interest on the Certificates
to the Prepayment Date and (C) all other aggregate sums due the
Indenture Trustee under the Indenture or under the Participation
Agreement or the Lease, but excluding any Make-Whole Premium or other
premium or penalty, or
(2) if such prepayment is made pursuant to clause (ii), (iii)
(if clause (i), but not clause (ii) or clause (iii) of the first
sentence of Section 8.02(a) of the Indenture is applicable and such
prepayment is made when an Event of Default has occurred and been
continuing for less than 180 days), (iv), (v) or (vii) above, the sum
of the amounts specified in clauses (A), (B) and (C) of the preceding
clause (1) plus any Make-Whole Premium payable in respect of all
Certificates
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the Lessee
shall assume all of the obligations of the Owner Trustee hereunder, under the
Certificates and all other Operative Agreements, the Owner Participant and the
Owner Trustee shall (except for prior acts) be released and discharged from any
further obligations hereunder and under the Certificates and all other Operative
Agreements (except any obligations that have accrued prior to such assumption).
If an Indenture Event of Default under the Indenture shall occur and be
continuing, the principal of the Certificates may be declared due and payable in
the manner and with the effect provided in the Indenture. The Indenture provides
that in certain events such declaration and its consequences may be waived by
the Majority in Interest of Holders. Any such consent or waiver shall be
conclusive and binding upon the Holder of this Certificate and upon all future
Holders and owners of this Certificate and any Certificate that may be issued in
exchange or substitution therefor, whether or not any notation thereof is made
upon this Certificate or such other Certificates. Moreover, if, and only if, an
Event of Default shall occur, the Indenture Trustee may declare the Lease to be
in default, and may, to the exclusion of the Owner Trustee, exercise one or more
of the remedies of the Owner Trustee provided in the Lease.
The Owner Trustee or the Owner Participant may cure a default by the
Lessee under the Lease arising from the failure of the Lessee to make any Basic
Rent payments under the Lease, but the Owner Trustee and the Owner Participant,
collectively, may not cure more than three consecutive such failures or more
than six such failures in total. The Owner Trustee or the Owner Participant may
cure any other default by the Lessee in the performance of its obligations under
the Lease, provided that such default can be cured by the payment of money.
If (A) an Event of Default shall have occurred and be continuing or (B)
the Indenture Trustee shall have taken action, or notified the Owner Participant
that it intends to take action, to foreclose the Lien of the Indenture or
otherwise commence the exercise of any significant remedy under Section 7.02 of
the Indenture or Section 15 of the Lease, or (C) the Certificates shall have
been accelerated, the Owner Participant (or the Owner Trustee on behalf of the
Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of all
the Outstanding Certificates by notifying the Indenture Trustee of such election
and depositing the sum of amounts contemplated by paragraph "first" under
Section 5.03 of the Indenture and the aggregate Prepayment Price of all such
Certificates with the Indenture Trustee for distribution to the Holders; or
(2) purchase all of the Outstanding Certificates by paying to
the Indenture Trustee an amount equal to the aggregate unpaid principal amount
of all Outstanding Certificates, plus accrued interest on such amount to the
date of purchase, plus all other sums due any Holder or the Indenture Trustee
under the Indenture, the Participation Agreement or the Lease, but without any
Make-Whole Premium (provided that the Make-Whole Premium shall be included if
such purchase is made pursuant to clause (i) of Section 8.02(a) of the Indenture
(but not pursuant to clause (ii) or clause (iii) of Section 8.02(a) of the
Indenture) when the Event of Default shall have occurred and been continuing for
less than 180 days).
The right of the Holder hereof to institute an action for any remedy
under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on this
Certificate on or after the respective due dates, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such Holder.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. So long as
any of the Certificates remain Outstanding, the Indenture Trustee will maintain
an office or agency where the Certificates may be presented for payment and a
facility or agency in New York, New York where the Certificates may be presented
for registration of transfer and for exchange as provided in the Indenture. As
provided in the Indenture and subject to certain limitations therein, this
Certificate is transferable, and upon surrender of this Certificate for
registration of transfer at the principal corporate trust office of the
Indenture Trustee, or at the office or agency maintained for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Indenture Trustee duly executed by,
the Holder or his attorney duly authorized in writing, one or more new
Certificates of the same Series and Maturity and interest rate and of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Series and Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same, upon
presentation thereof for such purpose at the principal corporate trust office of
the Indenture Trustee, or at an office or agency maintained for such purpose.
No service charge shall be levied for any such registration of transfer
or exchange, but the Indenture Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee shall deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
The indebtedness evidenced by this Certificate is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Certificates]1, [Series A and Series B
Certificates]2 [Series A, Series B, and Series C Certificates]3 and this
Certificate is issued subject to such provisions. The Holder of this
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on such Holder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture, and (c) appoints the Indenture
Trustee such Holder's attorney-in-fact for such purpose.*
As provided in the Indenture, the Indenture and the Certificates shall
be construed in accordance with and governed by the laws of the State of New
York.
This Certificate 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 officers on the certificate below.
-------------------------
1To be inserted in the case of a Series B Certificate. 2To be inserted
in the case of a Series C Certificate. 3To be inserted in the case of a
Series D Certificate.
*To be inserted for each Certificate other than any Series A Certificate.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust
Certificate (Atlantic Coast Airlines Trust No. ____________) to be duly executed
in its corporate name by its officer thereunto duly authorized.
Dated: September __, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee
By
Name:
Title:
FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Atlantic Coast Airlines Trust No. _________) referred
to in the within mentioned Indenture.
Dated: September __, 1997 THE FIRST NATIONAL BANK OF MARYLAND, not in its individual
capacity, but solely as Indenture Trustee
By
Name:
Title:
1
O7853/O59/N670FE/TRUST/trust.agt
Federal Express Corporation Trust No. N67OFE
0156828.07
===================================================================================================================
TRUST AGREEMENT
(ATLANTIC COAST AIRLINES TRUST NO. ____________)
Dated as of September 1, 1997
between
ATLANTIC COAST AIRLINES,
Trustor
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Owner Trustee
COVERING ONE CANADAIR REGIONAL JET, SERIES 200 ER AIRCRAFT
SERIAL NO._______, REGISTRATION NO. ___________
===================================================================================================================
16
TRUST AGREEMENT
(ATLANTIC COAST AIRLINES TRUST NO.__________)
TRUST AGREEMENT (ATLANTIC COAST AIRLINES TRUST NO.____________) dated
as of September 1, 1997 (this "Agreement") between STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association (in
its individual capacity, "SSB", and not in its individual capacity but solely as
trustee hereunder, the "Owner Trustee"), and ATLANTIC COAST AIRLINES, a
California corporation (together with its successors and permitted assigns, the
"Trustor"). The capitalized terms used herein, unless otherwise herein defined
or the context hereof shall otherwise require, shall have the respective
meanings set forth in Schedule I attached hereto.
W I T N E S S E T H:
WHEREAS, the Trustor desires to create a trust for the purpose of
issuing Certificates, the proceeds of which issuance shall initially be held by
the Indenture Trustee on behalf of the Owner Trustee in the Collateral Account
and released, subject to the proviso to Section 3.02(b) of the Participation
Agreement, on the Delivery Date in order to finance a portion of the Purchase
Price of the Aircraft, to acquire the Aircraft from Seller on the Delivery Date,
to lease the Aircraft to the Lessee on the Delivery Date and to receive the
benefits provided for herein.
WHEREAS, SSB is willing to accept the trust as herein provided and to
perform its obligations hereunder in its individual capacity or as the Owner
Trustee as the case may be.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, SSB and the Trustor agree as follows:
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee. The Trustor
hereby authorizes and directs (or has authorized and directed) the Owner
Trustee, not individually but solely as the Owner Trustee hereunder:
(a) to execute and deliver as and when specified in Sections
4.01 and 4.02 of the Participation Agreement, the Participation
Agreement and each of the other Operative Agreements to which the Owner
Trustee is a party and to enter into and perform the transactions
contemplated thereby including, without limitation, accepting title to,
and delivery of, the Aircraft from Seller on the Delivery Date, and
taking all appropriate action to cause the Airframe to be registered
with the Federal Aviation Administration in the name of the Owner
Trustee;
(b) to execute and deliver from time to time the Certificates
in the manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in
the Operative Agreements to which the Owner Trustee is a party or which
the Owner Trustee is required to deliver pursuant to the Operative
Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise
the rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments,
documents or certificates and take all such other actions in accordance
with the directions of the Trustor, as the Trustor may deem necessary
or advisable in connection with the Certificate Closing Date and the
Delivery Date and the transactions contemplated hereby, the taking of
any such action by the Owner Trustee in the presence of the Trustor or
its counsel to evidence, conclusively, the direction of the Trustor.
Section 1.02. Declaration of Trust. SSB hereby declares and agrees, in
its individual capacity, that it will, and in its capacity as the Owner Trustee
does, hold the Lessor's Estate upon the trust herein set forth for the use and
benefit of the Trustor, subject, however, to the provisions of, and the Lien
created by, the Indenture. This Agreement is not intended by the Trustor to
create, and the trust created hereby is not intended by the Trustor and the
other parties interested herein to constitute a business trust for purposes of
the Bankruptcy Code.
Section 1.03. Conditions Precedent. The right and obligation of the
Owner Trustee to take the actions required by Section 1.01 hereof shall be
subject to the condition that the terms and conditions of Section 4.01 or 4.02,
as the case may be, of the Participation Agreement shall have been complied with
in a manner satisfactory to the Owner Trustee and the Trustor.
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Predelivery Funding; Rent, Etc. (a) The Trustor and the
Owner Trustee acknowledge that the proceeds from the sale of the Certificates to
be effected on the Certificate Closing Date are to be held by the Indenture
Trustee in the Collateral Account in the manner specified in the Indenture for
application as provided therein and in Section 3.02 of the Participation
Agreement.
(b) The Trustor and the Owner Trustee acknowledge that the
Lease will be security for the Certificates pursuant to the Indenture
which provides that all moneys payable by the Lessee to the Owner
Trustee under the Lease (other than Excepted Payments) are to be first
paid to the Indenture Trustee while the Lien of the Indenture is in
effect, for distribution in accordance with the terms of Article V of
the Indenture. Except for amounts received from the Indenture Trustee,
which shall be applicable only in accordance with clause (iii) below,
the Owner Trustee shall promptly apply each payment of the Rent (other
than Excepted Payments), Stipulated Loss Value, Termination Value, and
any proceeds from the sale, requisition or disposition of the Aircraft
received by it as follows:
(i) prior to the release of the Lien of the
Indenture, each such payment shall be payable directly to the
Indenture Trustee (and if any of the same are received by the
Owner Trustee shall, upon receipt, be paid over to the
Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions
of Article V of the Indenture; provided, that any payments
received by the Owner Trustee from (x) the Lessee with respect
to SSB's or the Owner Trustee's fees and disbursements under
this Agreement, or (y) the Trustor pursuant to Section 5.01
hereof shall not be paid over to the Indenture Trustee but
shall be retained by the Owner Trustee and applied toward the
purpose for which such payments were made;
(ii) after the release of the Lien of the Indenture,
any amount remaining after application in full in accordance
with paragraph (b)(i) of this Section 2.01 and which
represents payments for which provision as to the application
thereof is made in any other Operative Agreement shall be
applied promptly to the purpose for which such payment shall
have been made in accordance with the terms of such Operative
Agreement; and
(iii) after application in accordance with paragraphs (i) and
(ii) of this Section 2.01(b), or to the extent received from
the Indenture Trustee under the terms of the Indenture, the
balance, if any, remaining shall be paid to the Trustor.
Section 2.02. Excepted Payments. Notwithstanding any other provision
contained herein, all Excepted Payments at any time received by the Owner
Trustee shall be distributed promptly to the applicable Person entitled thereto,
and such payment shall not be deemed under any circumstances to be part of the
Lessor's Estate.
Section 2.03. Distributions after Release of Lien of Indenture. Except as otherwise provided in
Sections 2.01 and 2.02 hereof:
(a) all payments received and amounts realized by the Owner
Trustee under the Lease or otherwise with respect to the Aircraft or
any part thereof (including, without limitation, all payments received
pursuant to Section 15(a) of the Lease and amounts realized upon the
sale or lease of the Aircraft or any part thereof after the termination
of the Lease with respect thereto), to the extent received or realized
at any time after the Lien of the Indenture shall have been released
pursuant to the terms of the Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.03
remaining as part of the Lessor's Estate after the Lien of the
Indenture has been released,
shall, to the extent required, be retained by the Owner
Trustee as reimbursement for all expenses hereunder or under the Lease not
theretofore reimbursed under this Agreement, the Lease or otherwise and to
which the Owner Trustee is entitled to be reimbursed pursuant to the
provisions thereof, and any balance remaining thereafter shall be
distributed to the Trustor.
Section 2.04. Manner of Making Distributions. The Owner Trustee shall
make distributions or cause distributions to be made to (i) the Trustor pursuant
to this Article 2 by transferring by wire transfer in immediately available
funds the amount to be distributed to the account set forth in the Participation
Agreement or to such other account or accounts of the Trustor as it may
designate from time to time by written notice to the Owner Trustee (and the
Owner Trustee shall use best efforts to cause such funds to be transferred by
wire transfer on the same day as received, but in any case not later than the
next succeeding Business Day), and (ii) the Indenture Trustee pursuant to this
Article 2 by paying the amount to be distributed to the Indenture Trustee in the
manner specified in the Indenture; provided, that the Owner Trustee shall invest
overnight, for the benefit of the Trustor, in investments that would be
permitted by Section 11(e) of the Lease (but only to the extent funds are
received on or prior to 2:00 P.M. (Eastern Time) and such investments are
available and, if such investments are not available to the Owner Trustee in
investments which, after consultation with the Trustor, the Trustor shall
direct) all funds not transferred by wire transfer on the same day as they were
received. Notwithstanding the foregoing but subject always to the provisions of,
and the Lien created by, the Indenture, the Owner Trustee will, if so requested
by the Trustor by written notice, pay in immediately available funds any and all
amounts payable by the Owner Trustee hereunder to the Trustor as directed by the
Trustor.
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties. SSB accepts the trust
hereby created and, subject to Section 1.03 hereof, in its capacity as the Owner
Trustee agrees to perform the same, including without limitation, subject to
Section 1.03 hereof, the actions specified in Section 1.01 hereof as herein
provided. The Owner Trustee agrees to disburse all monies that it receives under
the Operative Agreements in accordance with the terms hereof. The Owner Trustee
shall not be answerable or accountable in its individual capacity except as a
result of or arising from (a) the Owner Trustee's willful misconduct or gross
negligence (in its individual capacity or as trustee), (b) any breach by the
Owner Trustee of its representations, warranties and covenants given in its
individual capacity in this Agreement, Section 6 of the Lease, and Sections
7.02(a) and (b) and 7.04 of the Participation Agreement or its representations,
warranties and covenants given in its individual capacity in Sections 3.05 and
3.08 of the Indenture, (c) the failure to use ordinary care in receiving,
handling and disbursing funds, (d) Lessor's Liens attributable to it in its
individual capacity, and (e) taxes, fees, or other charges on, based on, or
measured by, any fees, commissions or compensation received by SSB or the Owner
Trustee in connection with the transactions contemplated by the Lease, the
Indenture and the Operative Agreements including this Agreement.
Section 3.02. Limitation on Authority of Owner Trustee. The Owner
Trustee shall have no power, right, duty or authority to, and agrees that it
will not, manage, control, possess, use, sell, lease, dispose of or otherwise
deal with the Aircraft, Airframe, Engines, any Part thereof or any other
property at any time constituting a part of the Lessor's Estate, or otherwise to
take or refrain from taking any action under or in connection with the Operative
Agreements, except (i) to execute and deliver the Operative Agreements to which
it is a party, (ii) to exercise and carry out or cause to be exercised or
carried out the rights, duties and obligations of the Owner Trustee hereunder
and under the other Operative Agreements, or (iii) as expressly provided in
written instructions from the Trustor given pursuant to Section 3.03 or 3.04
hereof; provided, that nothing in this Section 3.02 shall limit in any manner
the obligations of the Owner Trustee hereunder.
Section 3.03. Notice of Default. In the event that a Responsible
Officer in the Corporate Trust Department of the Owner Trustee shall have actual
knowledge of a Default or an Event of Default, or an Indenture Default or an
Indenture Event of Default, the Owner Trustee shall give or cause to be given to
the Trustor and the Indenture Trustee prompt telephone or facsimile notice,
followed by prompt confirmation thereof by certified mail, postage prepaid (in
any event within two Business Days of the discovery thereof), in accordance with
Article 14 of the Participation Agreement, of such Default, Event of Default,
Indenture Default or Indenture Event of Default. Subject to the terms of Section
3.06(e) hereof and the rights of the Indenture Trustee under the Indenture, the
Owner Trustee shall take such action with respect to such Default, Event of
Default, Indenture Default or Indenture Event of Default as shall be specified
in written instructions from the Trustor; provided that the Owner Trustee shall
have no duty to take any (and shall take no) action whatsoever in the absence of
written instructions from the Trustor. For all purposes of this Agreement and
the Lease, in the absence of actual knowledge of a Responsible Officer of the
Owner Trustee, the Owner Trustee shall not be deemed to have knowledge of a
Default, Event of Default, Indenture Default or Indenture Event of Default
unless notified in writing by the Lessee, the Trustor, the Indenture Trustee or
any Certificate Holder.
Section 3.04. Action Upon Instructions. Upon the written instructions
at any time and from time to time of the Trustor, the Owner Trustee will take or
refrain from taking such action, not inconsistent with provisions of the
Indenture, as may be specified in such instructions.
Section 3.05. Certain Duties and Responsibilities of Owner Trustee.
(a)(i) The Owner Trustee undertakes to perform such duties and only such duties
as are specifically set forth herein, and with the degree of care specified in
Section 3.01 hereof, and in accordance with written instructions given by the
Trustor hereunder, and no implied duties, covenants or obligations shall be read
into this Agreement, any such instructions or the Operative Agreements against
the Owner Trustee, and the Owner Trustee agrees that it will not manage,
control, possess, use, sell, lease, dispose of or otherwise deal with the
Aircraft or any part of the Lessor's Estate except as required by the terms of
the Operative Agreements, any such instructions and as otherwise provided
herein; and
(ii) in the absence of bad faith on its part, the
Owner Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Owner
Trustee and conforming to the requirements of this Agreement
or the other Operative Agreements, but in the case of any such
certificates or opinions which by any provisions hereof or
thereof are specifically required to be furnished to the Owner
Trustee, the Owner Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Trust Agreement or the Operative
Agreements.
(b) No provision hereof shall require SSB in its individual
capacity 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. Notwithstanding the foregoing, SSB agrees in its
individual capacity that it will, at its own cost and expense, promptly
take such action as may be necessary to discharge duly all Lessor's
Liens attributable to it in its individual capacity and will claim no
indemnity therefor hereunder, or under the Participation Agreement or
any Operative Agreement.
(c) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the
liability of or affording protection to the Owner Trustee shall be
subject to the provisions of this Section 3.05, except that in the
event of a conflict between this Section 3.05 and Section 3.01 hereof,
Section 3.01 hereof shall be controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee hereunder or under the other
Operative Agreements (including those furnished to the Indenture
Trustee pursuant to the terms of the Indenture) and not otherwise
furnished to the Trustor.
(e) Notwithstanding anything herein to the contrary, the Owner
Trustee shall not be authorized and shall have no power to "vary the
investment" of the Trustor within the meaning of Treasury Regulations
Section 301.7701-4(c)(1), it being understood that the Owner Trustee
shall have the power and authority to fulfill its obligations under
Section 2.06 hereof and Section 11(e) of the Lease.
Section 3.06. Certain Rights of Owner Trustee. Except as otherwise provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner Trustee
may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order or other paper or
document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request, direction or authorization by the Trustor or
any other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing,
delivered to the Owner Trustee, and signed in the name of such party by
any of the Chairman of the Board, the President, any Vice President,
the Treasurer or Assistant Treasurer or the Secretary or Assistant
Secretary or other duly authorized officer of such party; and any
resolution of the Board of Directors or committee thereof of such party
shall be sufficiently evidenced by a copy of such resolution certified
by the Secretary or an Assistant Secretary of such party, to have been
duly adopted and to be in full force and effect on the date of such
certification, and delivered to the Owner Trustee;
(c) whenever in the administration of this Agreement the Owner
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder or under
any of the other Operative Agreements, the Owner Trustee (unless other
evidence be herein or therein specifically prescribed), absent actual
knowledge of a Responsible Officer of the Owner Trustee to the
contrary, may rely in good faith upon a certificate in writing,
delivered to the Owner Trustee and signed by any of the Chairman of the
Board, the President, any Vice President, the Treasurer or Assistant
Treasurer or the Secretary or Assistant Secretary of the Lessee, the
Trustor, or the Indenture Trustee and notice of such need for such
proof or establishment shall be delivered to the Trustor, who may
advise the Owner Trustee in respect of such matter and the Owner
Trustee shall act in conformity with such advice;
(d) the Owner Trustee may exercise its powers and perform its
duties by or through such attorneys, agents and servants as it shall
appoint with due care, and it shall be entitled to rely upon the advice
of counsel reasonably selected by it with due care and shall be
protected by the advice of such counsel in anything done or omitted to
be done in accordance with such advice;
(e) the Owner Trustee shall not be under any obligation to
take any action under this Agreement or under any of the other
Operative Agreements at the request or direction of the Trustor unless
the Persons making such request or direction shall have offered to the
Owner Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance
with such request or direction; nor shall the Owner Trustee be required
to take any action deemed to impose on the Owner Trustee any obligation
to take any action, if the Owner Trustee shall have been advised by its
counsel that such action is unlawful or is contrary to the terms of
this Agreement or the other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order or other paper or document unless a
Responsible Officer of the Owner Trustee has actual knowledge that the
facts or matters stated therein are false or inaccurate, but the Owner
Trustee in its discretion may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Owner Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, to the same extent permitted to
the Lessor under the Lease, to examine the books and records of the
Lessee to reasonably determine whether the Lessee is in compliance with
the terms and conditions of the Lease and to examine the Aircraft,
Airframe, Engines or any Part thereof personally or by agent or
attorney; and
(g) without limiting the generality of Section 3.05 hereof,
except as otherwise provided in written instructions given to the Owner
Trustee by the Trustor or as otherwise provided in the Indenture or the
Participation Agreement, the Owner Trustee shall not have any duty (i)
to see to any recording or filing of the Lease or of this Agreement or
any financing statement or other notice or document relating thereto or
contemplated under the Operative Agreements or to see to the
maintenance of any such recording or filing (other than FAA reporting
requirements contained in 14 C.F.R. Sections 47.45 and 47.51), (ii) to
see to any insurance on the Aircraft or any part thereof or to effect
or maintain any such insurance, whether or not the Lessee shall be in
default with respect thereto, other than to forward to the Trustor and
(to the extent provided in the Indenture) the Indenture Trustee copies
of all certificates, reports and other written information which it
receives from the Lessee pursuant to the Lease, (iii) to see to the
payment or discharge of any tax, assessment or other governmental
charges or any Lien (except any Lessor's Lien attributable to it in its
individual capacity) owing with respect to, or assessed or levied
against any part of the Lessor's Estate, (iv) to confirm or verify any
financial statements or reports 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.
Section 3.07. No Representations or Warranties as to Certain Matters.
NEITHER THE OWNER TRUSTEE NOR SSB MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH SPECIFICATIONS,
CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR
PURPOSE OF THE AIRCRAFT, 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 ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that SSB
represents and warrants that on the Delivery Date the Owner Trustee shall have
received whatever right, title and interests in, to and under the Aircraft that
were conveyed to it by the Seller and SSB represents, warrants and covenants
that at all times on and after the Delivery Date the Aircraft shall be free of
all Lessor's Liens attributable to it, and that the Owner Trustee shall comply
with the last sentence of Section 3.05(b) hereof, or (b) any representation or
warranty as to the validity, legality or enforceability of this Agreement or any
other Operative Agreement to which the Owner Trustee is a party, or any other
document or instrument, or as to the correctness of any statement contained in
any thereof, except to the extent that any such representation, warranty or
statement is expressly made herein or therein as a representation or warranty by
the Owner Trustee or SSB and except that SSB hereby represents and warrants that
this Agreement has been, and (assuming the due authorization, execution and
delivery of this Agreement by the Trustor) the other Operative Agreements to
which the Owner Trustee is a party have been (or at the time of execution and
delivery of any such instrument by the Owner Trustee hereunder or pursuant to
the terms of the Participation Agreement that such an instrument will be) duly
executed and delivered by one of its officers who is or will be, as the case may
be, duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee and that this Agreement has been duly authorized, executed and
delivered by SSB and (assuming due authorization, execution and delivery of this
Trust Agreement by the Trustor) constitutes the legal, valid and binding
obligation of SSB enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
by general principles of equity.
Section 3.08. Status of Moneys Received. All moneys received by the
Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which they
were paid or are held, but need not be segregated in any manner from any other
moneys except to the extent required by law and may be deposited by the Owner
Trustee under such conditions as may be prescribed or permitted by law for trust
funds, or may be invested in direct obligations of the United States.
Section 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary course
of business, with the Lessee or any other corporation having relations with the
Lessee to the full extent permitted by law.
Section 3.10. Definition of a Responsible Officer. For purposes of this
Trust Agreement only, "Responsible Officer" when used with respect to the Owner
Trustee means the Chairman or the Vice-Chairman of the Board of Directors, the
Chairman or Vice-Chairman of the Executive Committee of the Board of Directors,
the President, any Vice President (whether or not designated by a number or a
word or words added before or after the title "Vice President"), the Secretary,
any Assistant Secretary, or any other officer in the Corporate Trust Department
of SSB customarily performing functions similar to those performed by any of the
above designated officers.
Section 3.11. Resignation or Removal of Owner Trustee. The Owner
Trustee or any successor thereof (a) shall resign if required to do so pursuant
to Section 7.02(b) of the Participation Agreement and (b) may resign at any time
without cause by giving at least 60 days' prior written notice to the Trustor
and the Indenture Trustee, such resignation in each case to be effective only
upon the appointment of a successor trustee and the acceptance of such
appointment by such successor. In addition, the Trustor may at any time remove
the Owner Trustee without cause by an instrument in writing delivered to the
Owner Trustee and the Indenture Trustee, such removal to be effective only upon
the appointment by the Trustor of a successor Owner Trustee and the acceptance
of such appointment by such successor. Upon the giving of notice of resignation
or removal of the Owner Trustee, the Trustor may appoint a successor Owner
Trustee by an instrument signed by the Trustor. If the Trustor shall not have so
appointed a successor Owner Trustee within 30 days after such resignation or
removal, the Owner Trustee, the Indenture Trustee or the Trustor may apply to
any court of competent jurisdiction to appoint a successor Owner Trustee to act
until such time, if any, as a successor or successors shall have been appointed
by the Trustor as above provided. Any successor Owner Trustee so appointed by a
court shall be superseded by any successor Owner Trustee subsequently appointed
by the Trustor.
The appointment of any successor Owner Trustee shall be subject to the
conditions set forth in Section 11.01 of the Participation Agreement.
Section 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture Trustee,
an instrument accepting such appointment, in form and substance acceptable to
the predecessor Owner Trustee and the Trustor and thereupon each successor Owner
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trust of the predecessor Owner Trustee in
the trust hereunder with like effect as if originally named as an Owner Trustee
herein, but nevertheless upon the written request of such successor Owner
Trustee, such predecessor Owner Trustee shall execute and deliver an instrument
transferring to such successor Owner Trustee, upon the trust herein expressed,
all estates, properties, rights, powers, duties, property or moneys then held by
such predecessor Owner Trustee upon the trust herein expressed. Upon any such
transfer by a predecessor Owner Trustee, such predecessor Owner Trustee shall
provide the successor Owner Trustee and Trustor an accounting of the Lessor's
Estate and the trust hereunder.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will use its best efforts to cause registration of the
Aircraft included in the Lessor's Estate to be transferred upon the records of
the Aeronautics Authority or other registry where the Aircraft may then be
registered into the name of the successor Owner Trustee and shall otherwise use
its best efforts to comply, or assist the successor Owner Trustee in complying,
with the provisions of Section 11.01 of the Participation Agreement.
Section 3.13. Merger or Consolidation of SSB. Any corporation into
which SSB in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which SSB shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 11.01 of the Participation Agreement, be the Owner
Trustee under this Agreement without further act; provided, that such
corporation shall not also be the Indenture Trustee.
Section 3.14. Co-Trustees. At any time, if the Owner Trustee or the
Trustor shall deem it necessary or prudent or desirable in order to conform to
legal requirements of any jurisdiction in which any part of the Lessor's Estate
may at the time be located, the Owner Trustee by an instrument in writing signed
by it, shall appoint one or more Persons approved by the Trustor to act as
co-trustee, or co-trustees, jointly with the Owner Trustee, or separate trustee
or separate trustees (except insofar as local law makes it necessary or prudent
or desirable for any such co-trustee or separate trustee to act alone), of all
or any part of the Lessor's Estate, and to vest in such Person or Persons, in
such capacity, such title to the Lessor's Estate or any part thereof, and such
rights, powers, duties, trusts or obligations as the Trustor may consider
necessary or prudent or desirable. The Owner Trustee shall not be liable for any
act or omission of any co-trustee or separate trustee appointed under this
Section 3.14. No appointment of, or action by, any co-trustee or separate
trustee appointed under this Section 3.14 will relieve the Owner Trustee of any
of its obligations under any Operative Agreement or otherwise affect any of the
terms of the Indenture or adversely affect the interests of the Indenture
Trustee or the Certificate Holders in the Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an instrument in
writing, constitute the Owner Trustee its or his attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its or his behalf and in its or his name subject to the conditions
of this Agreement.
Every additional trustee hereunder shall be a Citizen of the United
States and, to the extent permitted by law, be appointed and act, and the Owner
Trustee and its successors shall act, subject to the following provisions and
conditions:
(A) all powers, duties, obligations and rights conferred upon
the Owner Trustee in respect of the custody, control and management of
monies, the Aircraft or documents authorized to be delivered hereunder
or under the Participation Agreement shall be exercised solely by the
Owner Trustee;
(B) all other rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred or imposed upon
and exercised or performed by the Owner Trustee and such additional
trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(including the holding of title to the Lessor's Estate) the Owner
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall
be exercised and performed by such additional trustee;
(c) no power given to, or which is provided hereby may be
exercised by, any such additional trustee, except jointly with, or with
the consent in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder except as
otherwise provided hereunder; and
(E) the Trustor, at any time, by an instrument in writing may
remove any such additional trustee.
Section 3.15. Interpretation of Agreements. In the event that the Owner
Trustee is unsure as to the application of any provision of this Agreement or
any other Operative Agreement or any other agreement relating to the
transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is silent
or incomplete as to the course of action which the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee shall request
in writing sent in accordance with Article 14 of the Participation Agreement
instructions of the Trustor and, to the extent that the Owner Trustee acts in
good faith in accordance with any instructions received from the Trustor, shall
not be liable to any Person; provided, that in the event that no response is
made to the Owner Trustee by the Trustor within 25 Business Days after such
request, the Owner Trustee shall not be liable to any Person for acts taken by
the Owner Trustee in good faith in what it deems to be the best interests of the
Trustor or for any failure to act in any situation described above in this
Section 3.15. The provisions of this Section 3.15 shall not be applicable to the
Owner Trustee's obligations set forth in the last sentence of Section 3.01
hereof.
Section 3.16. Not Acting in Individual Capacity. In carrying out the
trust hereby created, the Owner Trustee will act solely as trustee hereunder and
not in its individual capacity except as expressly provided herein or in the
other Operative Agreements to which it is a party; and all Persons, other than
the Trustor as provided in this Agreement, having any claim against the Owner
Trustee by reason of the transactions contemplated hereby shall look only to the
Lessor's Estate for payment or satisfaction thereof, except to the extent
provided in the last sentence of Section 3.01 hereof.
Section 3.17. Books and Records: Tax Returns. The Owner Trustee shall
be responsible for the keeping of all appropriate books and records relating to
its receipt and disbursement of all moneys under this Agreement or any Operative
Agreement and shall, upon the request of the Trustor or its duly authorized
representative, make available such books and records at its principal trust
office during normal business hours for inspection and copying. The Owner
Trustee agrees to sign and file all returns with respect to Taxes that the
Trustor prepares (or causes to be prepared) and directs the Owner Trustee to
sign and file. The Owner Trustee, upon request, will furnish the Trustor with
all such information as may be reasonably required or necessary from the Owner
Trustee in connection with the preparation of such tax returns and in connection
with any other filing or audit and related litigation obligations. At the
request of the Trustor, and at the expense of the Lessee, the Owner Trustee
shall file an application with the Internal Revenue Service for a taxpayer
identification number with respect to the trust created hereunder and prepare or
cause to be prepared and sign and/or file the Federal fiduciary tax return with
respect to Taxes due and payable by the Trust in connection with the
transactions contemplated hereby or by any other Operative Agreement; provided,
however, that the Owner Trustee shall send a completed copy of each such return
to the Trustor not more than 60 nor less than 30 days prior to the due date of
such return; provided that the Owner Trustee shall have timely received all
necessary information to complete and deliver to the Trustor such return. The
Trustor, upon request, will furnish the Owner Trustee with all such information
as may be required from the Trustor in connection with the preparation of such
income tax returns.
The Owner Trustee shall keep copies of all returns delivered to or filed by it.
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination. This Agreement and the trust created and provided for hereby shall cease
and be terminated in any one of the following events, whichever shall first occur:
(a) The sale or other final disposition by the Owner Trustee
of all of its interest in all property constituting or included in the
Lessor's Estate and, if the Indenture shall then be in effect, the sale
or other disposition by the Indenture Trustee of all of its interest in
all property constituting or included in the Lessor's Estate, and the
final disposition by the Owner Trustee and, if the Indenture shall then
be in effect, the Indenture Trustee, of all moneys or other property or
proceeds constituting part of the Lessor's Estate in accordance with
the terms hereof; or
(b) 21 years less one day from the death of the last survivor
of the descendants of Queen Victoria of England living on the date of
this Agreement; provided, however, that if the Trust shall be or become
valid under applicable law for a period subsequent to 21 years less one
day from the death of the last survivor of the descendants of Queen
Victoria of England living on the date of this Agreement or, without
limiting the generality of the foregoing, if legislation shall become
effective providing for the validity or permitting the effective grant
of such trust for a period, in gross, exceeding the period for which
such trust is hereinabove stated to extend and be valid, then such
trust shall not terminate as provided in the first part of this
sentence but shall extend to and continue in effect until, but only if
such non-termination and extension shall then be valid under applicable
law, such time as the same shall, under applicable law, cease to be
valid.
Section 4.02. Termination at Option of the Trustor. Notwithstanding
Section 4.01 hereof, this Agreement and the trust created hereby shall terminate
and the Trust Estate shall be distributed to the Trustor, and this Agreement
shall be of no further force and effect, upon the election of the Trustor by
notice to the Owner Trustee, if such notice shall be accompanied by the written
agreement (in form and substance satisfactory to the Owner Trustee) of the
Trustor assuming all the obligations of the Owner Trustee under or contemplated
by the Operative Agreements or incurred by it as trustee hereunder and releasing
the Owner Trustee therefrom; provided, however, that such notice may be given
only after the time the Lien of the Indenture is discharged under Section 14.01
of the Indenture and the Lease has terminated unless the Trustor shall have
received the prior written consent of the Indenture Trustee to any such
termination in which case such notice may be given while the Lien of the
Indenture is outstanding.
Section 4.03. Distribution of Lessor's Estate upon Termination. Upon
any termination of this trust pursuant to the provisions of Section 4.01 hereof,
the Owner Trustee shall convey the Lessor's Estate (subject to all obligations,
if any, of the Owner Trustee then existing under the Operative Agreements to
which the Owner Trustee is a party) to such purchaser or purchasers or the
Trustor, as the case may be, and for such amount and on such terms as shall be
specified in written instructions from the Trustor delivered to the Owner
Trustee prior to the date of termination; provided, that (i) if at the time of
any termination the Lease remains in force and effect, then the Lessor's Estate
shall be sold as a unit (and not in parcels) and subject to the Lease, and (ii)
in the event such written instructions are not delivered to the Owner Trustee on
or before the date of termination, the Owner Trustee shall transfer title to the
Lessor's Estate to the Trustor. Upon making such transfer or sale and accounting
for all funds which have come into its hands, the Owner Trustee shall be
entitled to receipt of any sums due and owing to the Owner Trustee for expenses
incurred pursuant hereto as set forth in Section 2.05 hereof.
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
The Initial Owner Participant may, on the Delivery Date (or, if
earlier, the Transfer Date), assign, convey or otherwise transfer its Beneficial
Interest to one or more Persons to enable the Owner Trustee to purchase the
Aircraft pursuant to Section 3.02 of the Participation Agreement.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification. The Trustor shall assume liability for,
and shall indemnify, protect, save and keep harmless SSB from and against any
and all liabilities, obligations, losses, damages, penalties, taxes, claims,
actions, proceedings, suits, costs (including reasonable attorneys' fees),
expenses and disbursements of any kind and nature whatsoever ("Trust Claims")
imposed on, incurred by or asserted against the Owner Trustee or SSB, as the
case may be (but only to the extent the Owner Trustee or SSB, as the case may
be, is not indemnified by the Lessee for such Trust Claims under any Operative
Document or is not indemnified by any other Person for such Trust Claims, within
a reasonable time after demand therefor), in any way relating to or arising out
of (X) the Trust Estate or any of the properties included therein and (Y) the
administration of the Trust Estate or the action of inaction of the Owner
Trustee hereunder or under the Operative Documents including, but not limited
to, claims under any Environmental Laws; provided, however, that (a) the Trustor
shall not be required to indemnify the Owner Trustee or SSB in the case of (i)
willful misconduct, negligence with respect to handling of funds, gross
negligence or bad faith of the Owner Trustee or SSB, as the case may be, (ii)
the Owner Trustee's or SSB's failure to use ordinary care in the handling of
monies constituting part of the Trust Estate, (iii) Taxes of the Owner Trustee
or SSB, as the case may be, that are based on or measured by the compensation
received by SSB for acting as Owner Trustee hereunder, and (iv) items excluded
from indemnification by the Lessee as, as to the extent, provided in Section
8.01(b)(i)-(xiii) and 9.01(b)(i)-(xii) of the Participation Agreement, and (b)
the Trustor shall not be required to indemnify with respect to Trust Claims
resulting from a breach of the covenants by SSB in Article 3 hereof or Trust
Claims resulting because any representation or warranty of the Owner Trustee or
SSB, as the case may be, contained in any Operative Document proves to be untrue
or inaccurate or the failure by the Owner Trustee or SSB, as the case may be, to
perform or observe any agreements, covenants or conditions to be performed or
observed by it in any of the Operative Documents. None of the foregoing
exclusions shall limit the obligation of the Trustor to indemnify SSB (but SSB
shall still be required to seek indemnification from the Lessee before making a
claim against the Trustor hereunder unless such exclusion is otherwise limited
under Sections 8.01(b) and 9.01(b) of the Participation Agreement), (i) for
actions taken in accordance with written instructions received from the Trustor,
and (ii) to the extent such exclusions are attributable to acts or omissions of
the Trustor. The payor of any indemnity under this Section 5.01 shall be
surrogated to any right of the person indemnified in respect of the matter as to
which such indemnity was paid. The indemnities contained in this Section 6.01
shall survive the termination of this Agreement.
Section 6.02. Limitations on the Trustor's Liability. The Trustor shall
not have any liability for the performance of this Agreement except as expressly
set forth herein.
Section 6.03. Fees; Compensation. Except as provided in Section 3.06(e)
or 6.01 hereof, the Owner Trustee agrees that it shall have no right against the
Trustor or the Trust Estate for any fee as compensation for its services
hereunder.
Section 6.04. Supplements and Amendments. At any time and from time to
time, only upon the written request of the Trustor (a) SSB and the Trustor shall
execute a supplement hereto for the purpose of adding provisions to, or changing
or eliminating provisions of, this Agreement as specified in such request and
(b) the Owner Trustee shall, subject to the provisions of Section 8.01 of the
Indenture, enter into or consent to such written amendment or modification of or
supplement to any of the Operative Agreements as the Trustor and any other
necessary parties may agree to in writing and as may be specified in such
request, or execute and deliver such written waiver of the terms of any of the
Operative Agreements as may be agreed to in writing by the Trustor and as may be
specified in such request; provided, that (i) the Owner Trustee shall not
execute any such supplement, amendment, waiver or modification without the prior
written consent of the Trustor, (ii) if in the reasonable opinion of the Owner
Trustee any document required to be executed by it pursuant to this Section
adversely affects any right or duty of, or immunity or indemnity in favor of,
the Owner Trustee under this Agreement or any other Operative Agreement, the
Owner Trustee may in its discretion decline to execute such document and (iii)
any amendment or supplement to this Agreement shall comply with the provisions
of Section 7.13 of the Participation Agreement. It shall not be necessary that
any request pursuant to this Section specify the particular form of the proposed
document to be executed pursuant to such request, but it shall be sufficient if
such request shall indicate the substance thereof. Promptly after the execution
by SSB or the Owner Trustee of any document pursuant to this Section, the Owner
Trustee shall mail a conformed copy thereof to the Trustor, the Indenture
Trustee and the Lessee, but the failure of the Owner Trustee to mail such
conformed copies shall not impair or affect the validity of such document.
Section 6.05. Nature of Title of Trustor. The Trustor shall not have
any legal title to any part of the Lessor's Estate. No transfer, by operation of
law or otherwise, of the right, title and interest of the Trustor in and to the
Lessor's Estate or the trust hereunder shall operate to terminate this Agreement
or Lessor's Estate.
Section 6.06. Power of Owner Trustee to Convey. Any assignment, sale,
transfer or other conveyance by the Owner Trustee of the interest of the Owner
Trustee in the Operative Agreements or in the Aircraft or any part thereof
pursuant to and in compliance with the terms of this Agreement or the Operative
Agreements shall bind the Trustor and shall be effective to transfer or convey
all right, title and interest of the Owner Trustee in and to the Operative
Agreements or the right, title and interest of the Owner Trustee and the Trustor
in and to the Aircraft or such part thereof. No purchaser or other grantee shall
be required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Owner
Trustee.
Section 6.07. Notices. All notices, demands, declarations and other communications required by this
Agreement shall be given and become effective in the manner prescribed in the Participation Agreement.
Section 6.08. Situs of Trust; Applicable Law; Severability. THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT, INCLUDING ALL MATTERS OF
VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement shall
be invalid or unenforceable, the remaining provisions hereof shall continue to
be fully effective; provided, that such remaining provisions do not increase the
obligations or liabilities of the Owner Trustee or the Trustor.
Section 6.09. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and permitted assigns, including any
successive holder of the Beneficial Interest, but only to the extent the
Beneficial Interest has been transferred or assigned in accordance with the
limitations of Section 7.03(d) of the Participation Agreement.
Section 6.10. Headings and Table of Contents. The headings of the
Articles and Sections of this Agreement and the Table of Contents are inserted
for convenience only and shall not affect the meaning or construction of any of
the provisions hereof.
Section 6.11. Identification of Trust. This trust may for convenience be referred to as the "Atlantic
Coast Airlines Trust No. _______________."
Section 6.12. Counterparts. This instrument may be executed in any
number of counterparts or upon separate signature pages bound together in
several counterparts, each fully-executed set of which when so executed shall be
deemed to be an original, and such counterparts together shall constitute and be
one and the same instrument.
Section 6.13. Trustor Interest. The Trustor has only a beneficial
interest in any specific property of this Trust. No creditor of the Trustor
shall have any right to obtain possession of, or otherwise exercise legal or
equitable remedies with respect to, the property of this trust (as opposed to
the Trustor's beneficial interest in this trust).
Section 6.14. Performance by the Trustor. Any obligation of the Owner
Trustee hereunder or under any Operative Agreement or other document
contemplated herein may be performed by the Trustor and any such performance
shall not be construed as a revocation of the trust created hereby.
IN WITNESS WHEREOF, SSB and the Trustor have caused this Agreement to
be duly executed all as of the date first above written.
ATLANTIC COAST AIRLINES
By:
Name: ______________________
Title: _______________________
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION
By:
Name: ______________________
Title: _______________________
