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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 H]
Dated as of September 25, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Indenture Trustee,
Indenture Trustee
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SECURED CERTIFICATES COVERING
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
BEARING U.S. REGISTRATION ▇▇▇▇ N508XJ
LEASED BY NORTHWEST AIRLINES, INC.
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TABLE OF CONTENTS
Page
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GRANTING CLAUSE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................6
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates..................................6
SECTION 2.02. Issuance and Terms of Secured Certificates...................12
SECTION 2.03. Payments from Trust Indenture Estate Only....................14
SECTION 2.04. Method of Payment............................................16
SECTION 2.05. Application of Payments......................................18
SECTION 2.06. Termination of Interest in Trust Indenture Estate............19
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates .19
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates ...20
SECTION 2.09. Payment of Expenses on Transfer; Cancellation................21
SECTION 2.10. Mandatory Redemptions of Secured Certificates................21
SECTION 2.11. Voluntary Redemptions of Secured Certificates................22
SECTION 2.12. Redemptions; Notice of Redemption............................22
SECTION 2.13. Assumption of Secured Certificates by Lessee.................24
SECTION 2.14. Option to Purchase Secured Certificates......................24
SECTION 2.15. Subordination................................................25
SECTION 2.16. Establishment of Collateral Account..........................25
SECTION 2.17. Investment of Funds on Deposit in the Collateral Account ....26
SECTION 2.18. Release of Debt Portion and Lien on the Collateral Account
and the Liquid Collateral on Delivery Date.................27
SECTION 2.19. Release of Collateral Account................................27
SECTION 2.20. Reoptimization...............................................28
SECTION 2.21. No Make-Whole Amount.........................................28
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE
SECTION 3.01. Rent Distribution............................................28
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing................................................29
SECTION 3.03. After Event of Default.......................................30
SECTION 3.04. Certain Payments.............................................32
SECTION 3.05. Other Payments...............................................33
SECTION 3.06. Payments to Owner Trustee....................................33
SECTION 3.07. Application of Payments Under Guarantee......................34
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF
INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee...................................34
SECTION 4.02. Event of Default.............................................35
SECTION 4.03. Certain Rights...............................................37
SECTION 4.04. Remedies.....................................................38
SECTION 4.05. Return of Aircraft, Etc......................................40
SECTION 4.06. Remedies Cumulative..........................................42
SECTION 4.07. Discontinuance of Proceedings................................42
SECTION 4.08. Waiver of Past Defaults......................................42
SECTION 4.09. Appointment of Receiver......................................42
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale, Etc ..43
SECTION 4.11. Rights of Certificate Holders to Receive Payment.............43
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default...................................43
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations ....44
SECTION 5.03. Indemnification..............................................46
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions...............................................47
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions...............................................47
SECTION 5.06. Replacement Airframes and Replacement Engines................47
SECTION 5.07. Indenture Supplements for Replacements.......................50
SECTION 5.08. Effect of Replacement........................................51
SECTION 5.09. Investment of Amounts Held by Indenture Trustee..............51
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties..............................52
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SECTION 6.02. Absence of Duties............................................52
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents.53
SECTION 6.04. No Segregation of Monies; No Interest........................53
SECTION 6.05. Reliance; Agreements; Advice of Counsel......................54
SECTION 6.06. Capacity in Which Acting.....................................54
SECTION 6.07. Compensation.................................................54
SECTION 6.08. Instructions from Certificate Holders........................55
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.....................................55
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............................56
SECTION 8.02. Resignation of Indenture Trustee; Appointment of Successor ..56
SECTION 8.03. Appointment of Additional and Separate Trustees..............57
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND
OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations........................59
SECTION 9.02. Trustees Protected...........................................61
SECTION 9.03. Documents Mailed to Certificate Holders......................61
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement.........................61
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture..............................62
SECTION 10.02. No Legal Title to Trust Indenture Estate in Certificate
Holders....................................................62
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding............62
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Certificate Holders.63
SECTION 10.05. Notices.....................................................63
SECTION 10.06. Severability................................................63
SECTION 10.07. No Oral Modification or Continuing Waivers..................63
SECTION 10.08. Successors and Assigns......................................64
SECTION 10.09. Headings....................................................64
SECTION 10.10. Normal Commercial Relations.................................64
SECTION 10.11. Governing Law; Counterpart Form.............................64
SECTION 10.12. Voting by Certificate Holders...............................65
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SECTION 10.13. Bankruptcy..................................................65
SECTION 10.14. No Action Contrary to Lessee's Rights Under the Lease ......65
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 H]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 H], dated as of
September 25, 1997 ("Trust Indenture") between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as expressly stated herein, but solely as Owner Trustee under the Trust
Agreement referred to below (together with its successors under the Trust
Agreement, the "Owner Trustee"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity, except as expressly
stated herein, but solely as Indenture Trustee hereunder (together with its
successors hereunder, the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Initial Owner Participant and the Owner Trustee have
entered into the Trust Agreement whereby, among other things, (i) the Owner
Trustee has established a certain trust for the use and benefit of the Initial
Owner Participant subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of, and with the priority of payment to,
the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee
has been authorized and directed to execute and deliver this Trust Indenture;
WHEREAS, the parties desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee to the Pass Through
Trustees (or their designee) of the Secured Certificates evidencing the
participation of the Pass Through Trustees in the payment of Lessor's Cost for
the Aircraft, as provided in the Participation Agreement and (ii) to provide for
the assignment, mortgage and pledge by the Owner Trustee to the Indenture
Trustee, as part of the Trust Indenture Estate hereunder of the Owner Trustee's
right, title and interest in and to the Liquid Collateral and after the Delivery
Date the assignment, mortgage and pledge by the Owner Trustee to the Indenture
Trustee, as part of the Trust Indenture Estate hereunder, among other things, of
all of the Owner Trustee's right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of the Owner Trustee's right,
title and interest in, to and under the Lease and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Certificate
Holders, subject to Section 2.15 and Article III hereof;
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
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WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened.
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment of the Principal Amount of,
interest on, Make-Whole Amount, if any, and all other amounts due with respect
to, all Secured Certificates from time to time outstanding hereunder and the
performance and observance by the Owner Trustee of all the agreements, covenants
and provisions herein and in the Participation Agreement and the Secured
Certificates contained, for the benefit of the Certificate Holders and the
prompt payment of all amounts from time to time owing under the Participation
Agreement to the Certificate Holders by the Owner Trustee and for the uses and
purposes and subject to the terms and provisions hereof, and in consideration of
the premises and of the covenants herein contained, and of the acceptance of the
Secured Certificates by the holders thereof, and for other good and valuable
consideration the receipt and adequacy whereof are hereby acknowledged, the
Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors in trust and assigns, for the security and benefit of the Certificate
Holders, a first priority security interest in and mortgage lien on all right,
title and interest of the Owner Trustee in, to and under the following described
property, rights and privileges, other than Excluded Payments (which
collectively, excluding Excluded Payments but including all property hereafter
specifically subjected to the Lien of this Trust Indenture by the Trust
Agreement and Indenture Supplement or any mortgage supplemental hereto, are
included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time acquire title as provided herein and in the
Lease), all as more particularly described in the Trust Agreement and
Indenture Supplement executed and delivered with respect to the Aircraft
or any such replacements or substitutions therefor, as provided in this
Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Basic Rent, Supplemental
Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the Consent and
Agreement and the ▇▇▇▇ of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this
Indenture;
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(5) the Collateral Account, the Liquid Collateral and all other
moneys and securities (including Cash Equivalents) 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 Document, except the Tax Indemnity Agreement, and held or
required to be held by the Indenture Trustee hereunder;
(6) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under
Section 11 of the Lease, but excluding insurance proceeds described in
clauses (ii) and (iii) of the definition of Excluded Payments;
(7) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all
rights of the Owner Trustee to enforce payments of any such amounts
thereunder, but excluding amounts described in clauses (i) and (v) of the
definition of Excluded Payments;
(8) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms
of this Indenture or the Lease or required hereby or by the Lease to be
held by the Indenture Trustee hereunder (other than Excluded Payments);
and
(9) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture Estate
all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery hereof, the Owner Trustee is
delivering to the Indenture Trustee the original executed counterpart of the
Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt
is attached), and executed copies of the Participation Agreement, and the
Purchase Agreement Assignment with the Consent and Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (9) inclusive above, subject to the terms and
provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party to perform all of the
obligations assumed by it thereunder,
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except to the extent prohibited or excluded from doing so pursuant to the terms
and provisions thereof, and the Indenture Trustee and the Certificate Holders
shall have no obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall the Indenture Trustee
or the Certificate Holders be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to any of the
Indenture Agreements to which it is a party, or, except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, granted for good and
valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate ▇▇▇▇ of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall
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accept for distribution pursuant to the Trust Agreement any amounts distributed
to it by the Indenture Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee and its predecessor(s) in this transaction, and that it will not, except
as otherwise provided in this Trust Indenture and except with respect to
Excluded Payments to which it is entitled, (i) accept any payment from Lessee
under any Indenture Agreement, (ii) enter into any agreement amending or
supplementing any Indenture Agreement, (iii) execute any waiver or modification
of, or consent under, the terms of, or exercise any rights, powers or privileges
under, any Indenture Agreement, (iv) settle or compromise any claim (other than
those relating to an Excluded Payment) arising under any Indenture Agreement or
(v) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any Indenture Agreement to arbitration
thereunder.
The Owner Trustee does hereby further agree that it will not without
the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any payment of
Rent (other than Excluded Payments), including Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be made pursuant to
Section 9 or 10 of the Lease prior to the date for the payment thereof
provided for by the Lease or assign, transfer or hypothecate (other than
to the Indenture Trustee hereunder) any payment of Rent, including Basic
Rent, Stipulated Loss Value, Termination Value or any other payment to be
made pursuant to Section 9 or 10 of the Lease, then due or to accrue in
the future under the Lease in respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in connection with
the appointment of a successor owner trustee, sell, mortgage, transfer,
assign or hypothecate (other than to the Indenture Trustee hereunder) its
interest in the Airframe and Engines or
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any part thereof or in any amount to be received by it from the use or
disposition of the Airframe and Engines, other than amounts distributed to
it pursuant to Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
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 Annex A
hereto for all purposes of this Trust Indenture.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates. The Secured Certificates
shall be substantially in the form set forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1997 H] DATED AS OF SEPTEMBER 25, 1997.
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SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N508XJ.
No. ____ Date: [______, __]
$__________________
INTEREST RATE MATURITY DATE
[________]
[________, _______]
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as Owner Trustee (herein in such capacity called the "Owner
Trustee") under that certain Trust Agreement [NW 1997 H], dated as of September
25, 1997, between the Owner Participant named therein and the Owner Trustee
(herein as such Trust Agreement may be supplemented or amended from time to time
called the "Trust Agreement"), hereby promises to pay to ___________, or the
registered assignee thereof, the principal sum of $_________ (the "Principal
Amount"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1998, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "Trust Indenture" means the Trust
Indenture and Security Agreement [NW 1997 H], dated as of September 25, 1997,
between the Owner Trustee and State Street Bank and Trust Company (the
"Indenture Trustee"), as the same may be amended or supplemented from time to
time. All other capitalized terms used in this Secured Certificate and not
defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any
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overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest and any other amounts
payable hereunder which are overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if
any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust 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 Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of
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such payment, second to the payment of the Principal Amount of this Secured
Certificate then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Trust Indenture, and fourth, the
balance, if any, remaining thereafter, to the payment of Principal Amount of
this Secured Certificate remaining unpaid in the inverse order of their normal
maturity.
This Secured Certificate is one of the Secured Certificates referred
to in the Trust Indenture which have been or are to be issued by the Owner
Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate
is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates](1) [Series A and Series B Secured Certificates](2), and this
----------
(1) To be inserted in the case of a Series C Secured Certificate.
-9-
Secured Certificate is issued subject to such provisions. The Certificate Holder
of this Secured Certificate, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Indenture Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in the Trust Indenture and (c) appoints the
Indenture Trustee his attorney-in-fact for such purpose.]**
The Owner Trustee shall have the right, on the Reoptimization Date,
to modify Schedule I attached hereto subject to the terms and conditions set
forth in Section 1(c)(ii) of the Participation Agreement. To give effect to the
foregoing the Indenture Trustee shall execute an amendment to this Trust
Indenture which shall set forth the new schedule of principal payments and
Schedule I attached hereto 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 Trust Indenture occurs later than the Delivery Date, this
Trust Indenture, as amended, shall, if required, be duly filed for recordation
with the FAA.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Secured
Certificate shall not be entitled to any benefit under the Trust Indenture or be
valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
--------------------------------------------------------------------------------
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A
Secured Certificate.
-10-
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By
-----------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By
-----------------------------------
Name:
Title:
-11-
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Payment Date Percentage of
Principal Amount
to be Paid
-------------------------- --------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Secured Certificates. The
Secured Certificates shall be dated the date of issuance thereof, shall be
issued in three separate series consisting of Series A, Series B and Series C
and in the maturities and principal amounts and shall bear interest as specified
in Schedule I hereto. On the date hereof, each Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith. The
Secured Certificates shall be issued in registered form only. The Secured
Certificates shall be issued in denominations of $1,000 and integral multiples
thereof, except that one Secured Certificate of each Series may be in an amount
that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1998, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made
-12-
on the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
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, Final Drawings and Applied
Downgrade Advances (as defined in the Liquidity Facilities) under any Liquidity
Facility except to the extent included in Net Interest and Related Charges, and
(c) any and all amounts received by the Owner Trustee which are payable by
Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used
in this Section, "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 Secured Certificates and the denominator
of which is the aggregate principal balance then outstanding of all
Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate a fraction,
the numerator of which is the aggregate principal balance then outstanding
of the Secured Certificates and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures 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 the Liquidity Provider on any
Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in
the Liquidity Facilities) exceeds the amount which would be payable if such
drawings bore interest at the Designated Interest Rate plus (ii) any amounts
payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each
Liquidity Facility (or similar provisions of any succeeding Liquidity Facility)
which result from any Interest Drawing, Final Drawing or Applied Downgrade
Advance (as defined in the Liquidity Facilities). As used in this Section
"Designated Interest Rate" means the weighted average Past Due Rate (as defined
in the applicable Indentures) except with respect to that portion of any Final
Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which
remains in a Cash Collateral Account, Designated Interest Rate means the
weighted average Investment Earnings of funds in the Cash Collateral Accounts.
As used in this Section, a Payment Default when used in connection with a
Secured Certificate or Equipment Note means a default in the payment of
principal thereof or interest thereon which has not been cured other than solely
because of acceleration. The following terms are used in this Section as defined
in the Intercreditor Agreement without regard to any amendment,
-13-
modification or supplement thereto after the Closing Date: Cash Collateral
Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing and
Investment Earnings.
The Secured Certificates shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without
impairing any of the other rights, powers, remedies, privileges, liens or
security interests of the Certificate Holders under this Trust Indenture, each
Certificate Holder, by its acceptance of a Secured Certificate, agrees that as
between it and the Owner Trustee, except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative Document, (i) the
obligation to make all payments of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the Secured
Certificates, and the performance by the Owner Trustee of every obligation or
covenant contained in this Trust Indenture and in the Participation Agreement or
any of the other Operative Documents, shall be payable only from the income and
proceeds from the Trust 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 Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Trust Indenture and any agreement referred
to herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate; therefore, anything contained in this Trust
Indenture or such other agreements to the contrary notwithstanding (except for
any express provisions or representations that the Owner Trustee is responsible
for, or is making, in its individual
-14-
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to ▇▇▇ the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate
Holders have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner
Participant from personal liability, or constitute a covenant not to ▇▇▇ the
Owner Participant, for any breach by it of any of its covenants, representations
or warranties contained in the Participation Agreement or for any of the
payments it has agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to ▇▇▇ the Owner Trustee
for any breach by it of any representations, warranties or covenants of the
Owner Trustee contained in the Operative Documents or (z) release the Owner
Trustee in its individual capacity from personal liability, or constitute a
covenant not to ▇▇▇ the Owner Trustee in its individual capacity for any breach
by it of any representations, warranties or covenants of the Owner Trustee made
in its individual capacity in the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee, directly or indirectly (other than the recourse liability
of the Owner Trustee
-15-
(in its individual capacity), to make payment on account of any amount payable
as principal, Make-Whole Amount, if any, interest or other amounts on the
Secured Certificates or under this Indenture and (iii) any Certificate Holder or
the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
Certificate Holder or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each Secured
Certificate or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Certificate Holders in the manner provided herein.
The Owner Trustee shall not have any responsibility for the distribution of such
payment to any Certificate Holder. Notwithstanding the foregoing or any
provision in any Secured Certificate to the contrary, the Indenture Trustee will
use reasonable efforts to pay or cause to be paid, if so directed in writing by
any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by
the Owner Trustee hereunder and under such holder's Secured Certificate or
Secured Certificates to such holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Trust Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such holder with a bank located in the continental
United States the amount to be distributed to such holder, for credit to the
account of such holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate such holders for loss of use of funds at the Debt Rate until such
payment is made and the Indenture Trustee shall be entitled to any interest
earned on such funds until such payment is made. Any payment made hereunder
shall be made without any presentment or surrender of any Secured Certificate,
except that, in the case of the final payment in respect of any Secured
Certificate, such Secured Certificate shall be surrendered to the Indenture
Trustee for cancellation promptly after such payment. Notwithstanding any other
provision of this Trust Indenture to
-16-
the contrary, the Indenture Trustee shall not be required to make, or cause to
be made, wire transfers as aforesaid prior to the first Business Day on which it
is practicable for the Indenture Trustee to do so in view of the time of day
when the funds to be so transferred were received by it if such funds were
received after 12:00 noon, New York City time, at the place of payment. Prior to
the due presentment for registration of transfer of any Secured Certificate, the
Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose
name any Secured Certificate is registered on the Secured Certificate Register
as the absolute owner and holder of such Secured Certificate for the purpose of
receiving payment of all amounts payable with respect to such Secured
Certificate and for all other purposes, and none of the Owner Trustee or the
Indenture Trustee shall be affected by any notice to the contrary. So long as
any signatory to the Participation Agreement or nominee thereof shall be a
registered Certificate Holder, all payments to it shall be made to the account
of such Certificate Holder specified in Schedule I thereto and otherwise in the
manner provided in or pursuant to the Participation Agreement unless it shall
have specified some other account or manner of payment by notice to the
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Secured Certificate (and such exclusion and withholding
shall constitute payment in respect of such Secured Certificate) any and all
United States withholding taxes applicable thereto as required by Law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such
-17-
Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such successor
certificate, form or forms as may be required by the United States Treasury
Department as necessary in order to avoid withholding of United States federal
income tax), during the calendar year in which the payment is made (but prior to
the making of such payment), and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Secured Certificates held by such holder, no amount shall
be withheld from payments in respect of United States federal income tax. If any
Certificate Holder has notified the Indenture Trustee that any of the foregoing
forms or certificates is withdrawn or inaccurate, or if such holder has not
filed a form claiming an exemption from United States withholding tax or if the
Code or the regulations thereunder or the administrative interpretation thereof
are at any time after the date hereof amended to require such withholding of
United States federal income taxes from payments under the Secured Certificates
held by such holder, the Indenture Trustee agrees to withhold from each payment
due to the relevant Certificate Holder withholding taxes at the appropriate rate
under Law and will, on a timely basis as more fully provided above, deposit such
amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
applicable law.
SECTION 2.05. Application of Payments. In the case of each Secured
Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and
interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by Law, any
overdue interest and any other overdue amounts thereunder) to the date of
such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate shall not be subject to redemption
except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
-18-
SECTION 2.06. Termination of Interest in Trust Indenture Estate. A
Certificate 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, Make-Whole Amount, if any, and interest on and other amounts due
under all Secured Certificates held by such Certificate Holder and all other
sums then payable to such Certificate Holder hereunder and under the other
Operative Documents by the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates. The Indenture Trustee shall keep a register (the "Secured
Certificate Register") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall
-19-
have been paid on such old Secured Certificate, and all payments of the
Principal Amount marked on such new Secured Certificate, as provided above,
shall be deemed to have been made thereon. The Owner Trustee shall not be
required to exchange any surrendered Secured Certificates as provided above
during the ten-day period preceding the due date of any payment on such Secured
Certificate. The Owner Trustee shall in all cases deem the Person in whose name
any Secured Certificate shall have been issued and registered as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable by the Owner Trustee with respect to such Secured
Certificate and for all purposes until a notice stating otherwise is received
from the Indenture Trustee and such change is reflected on the Secured
Certificate Register. The Indenture Trustee will promptly notify the Owner
Trustee, the Owner Participant and Lessee of each registration of a transfer of
a Secured Certificate. Any such transferee of a Secured Certificate, by its
acceptance of a Secured Certificate, agrees to the provisions of the
Participation Agreement applicable to Certificate Holders, including Sections 6,
8(c), 8(e), 8(k), 8(l), 8(q), 8(r), 8(t), 10, 13(b), 13(c), 15(b) and 15(c), and
shall be deemed to have represented and warranted (except as provided above),
and covenanted, to the parties to the Participation Agreement as to the matters
represented, warranted and covenanted by the Purchasers in the Participation
Agreement. Subject to compliance by the Certificate Holder and its transferee
(if any) of the requirements set forth in this Section 2.07, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Secured Certificates upon transfer or exchange within 10 Business Days of the
date a Secured Certificate is surrendered for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured
Certificates. If any Secured Certificate shall become mutilated, destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the holder of
such Secured Certificate, execute and the Indenture Trustee shall authenticate
and deliver in replacement thereof a new Secured Certificate, payable in the
same Principal Amount dated the same date and captioned as issued in connection
with the Aircraft. If the Secured Certificate being replaced has become
mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the
Secured Certificate being replaced has been destroyed, lost or stolen, the
holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable
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efforts to issue new Secured Certificates within 10 Business Days of the date of
the written request therefor from the Certificate Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Certificate Holder for any registration of
transfer or exchange of Secured Certificates, but the Indenture Trustee, as
Secured Certificate Registrar, may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Secured Certificates.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. Mandatory Redemptions of Secured Certificates. (a) On
the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease
to make payment for an Event of Loss with respect to the Aircraft, all of the
Secured Certificates shall be redeemed in whole at a redemption price equal to
100% of the unpaid Principal Amount thereof, together with all accrued interest
thereon to the date of redemption and all other amounts payable hereunder or
under the Participation Agreement to the Certificate Holders but without
Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the
Lease is so terminated all the Secured Certificates shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Principal Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
(c) If the Manufacturer Delivery has not occurred on or prior to the
Prepayment Date, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount, as contemplated by Section
2.19 and Section 18(c) of the Participation Agreement.
(d) If (i) the Manufacturer Delivery shall have occurred, (ii) the
Delivery Date shall not have occurred on or prior to the Cut-Off Date and (iii)
Lessee shall not have assumed the Secured Certificates by the Determination
Date, all of the Secured Certificates shall be redeemed in whole at a redemption
price equal to 100% of the unpaid Principal Amount thereof, together with all
accrued interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders but
without Make-Whole Amount, as contemplated by Section 2.19 and Section 18(d) of
the Participation Agreement.
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(e) If (i) a Triggering Event shall have occurred on or prior to the
Prepayment Date, (ii) the Delivery Date shall not have occurred and (iii) Lessee
shall not have assumed the Secured Certificates, all of the Secured Certificates
shall be redeemed in whole at a redemption price equal to 100% of the unpaid
Principal Amount thereof, together with all accrued interest thereon to the date
of redemption and all other amounts payable hereunder or under the Participation
Agreement to the Certificate Holders but without Make-Whole Amount, as
contemplated by Section 2.19 and Section 18(e) of the Participation Agreement.
(f) With respect to Series C Secured Certificates only, the Series C
Secured Certificates shall be redeemed in part at a redemption price equal to
100% of the unpaid Principal Amount thereof, together with all accrued interest
thereon to the date of redemption and all other amounts payable hereunder or
under the Participation Agreement to the Certificate Holders but without
Make-Whole Amount, as provided in Section 1(c)(ii) of the Participation
Agreement.
SECTION 2.11. Voluntary Redemptions of Secured Certificates. Any or
all of the Secured Certificates may be redeemed by the Owner Trustee in
connection with a transaction described in, and subject to the terms and
conditions of, Section 17 of the Participation Agreement upon at least 30 days'
revocable prior written notice to the Indenture Trustee and the Certificate
Holders, and the Secured Certificates shall, as provided in Section 17 of the
Participation Agreement, be redeemed in whole at a redemption price equal to
100% of the unpaid Principal Amount thereof, together with accrued interest
thereon to the date of redemption and all other amounts payable hereunder or
under the Participation Agreement to the Certificate Holders plus Make-Whole
Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption. (a) Neither any
redemption of any Secured Certificate nor any purchase by the Owner Trustee of
any Secured Certificate may be made except to the extent and in the manner
expressly permitted by this Trust Indenture. No purchase of any Secured
Certificate may be made by the Indenture Trustee. In the case of a redemption of
the Secured Certificates pursuant to Section 2.10(c) above, the Secured
Certificates shall be redeemed on the 15th day following the Prepayment Date. In
the case of a redemption of the Secured Certificates pursuant to Section 2.10(d)
above, the Secured Certificates shall be redeemed on the 15th day following the
Determination Date. In the case of a redemption of the Secured Certificates
pursuant to Section 2.10(e) above, the Secured Certificates shall be redeemed on
the 15th day following the date of occurrence of the applicable Triggering
Event. In the case of a redemption of the Series C Secured Certificates pursuant
to Section 2.10(f) above, the amount of such Series C Secured Certificates to be
redeemed shall be redeemed on the Reoptimization Date.
(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be
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revocable and shall be deemed revoked in the event that the Lease does not in
fact terminate on the specified termination date or if notice of such redemption
shall have been given in connection with a refinancing of Secured Certificates
and the Indenture Trustee receives written notice of such revocation from Lessee
or the Owner Trustee not later than three days prior to the redemption date. All
notices of redemption shall state: (1) the redemption date, (2) the applicable
basis for determining the redemption price, (3) that on the redemption date, the
redemption price will become due and payable upon each such Secured Certificate,
and that, if any such Secured Certificates are then outstanding, interest on
such Secured Certificates shall cease to accrue on and after such redemption
date, and (4) the place or places where such Secured Certificates are to be
surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Secured Certificates to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at any office or agency maintained for such purposes pursuant to Section 2.07,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. Assumption of Secured Certificates by Lessee. If, in
accordance with Section 1(e)(i) or Section 8(x) of the Participation Agreement
and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be
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released and discharged from any further obligations under the Participation
Agreement and any other Operative Document to which it is a party, except with
respect to any such obligations that accrued prior thereto.
SECTION 2.14. Option to Purchase Secured Certificates. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.14, purchase
all but not less than all of the Secured Certificates outstanding hereunder, and
each Certificate Holder agrees that it will, upon such events and subject to
such terms and conditions and upon receipt of such price, sell, assign, transfer
and convey to such purchaser or its nominee (without recourse or warranty of any
kind except as to its title to the Secured Certificates and except against Liens
on such Secured Certificates arising by, through or under such holder), all of
the right, title and interest of such Certificate Holder in and to the Trust
Indenture Estate, this Trust Indenture and the Secured Certificates held by it,
and such purchaser or its nominee shall assume all of such holder's obligations
under the Participation Agreement and hereunder.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 180 days a Lease Event of Default, the purchase price
thereof shall equal the price provided in the preceding sentence plus the
Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant giving written notice of its election
of such option to the Indenture Trustee, which notice shall specify a date for
such purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to occur pursuant to the terms of the preceding
sentence. Such election to purchase the Secured Certificates shall become
irrevocable upon the sixteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date
of such purchase shall so request, the Certificate Holders will comply with all
the provisions of Section 2.07 to enable new Secured Certificates to be issued
to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in
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connection with the issuance of such new Secured Certificate shall be borne by
the Owner Participant.
SECTION 2.15. Subordination. (a) The Owner Trustee and, by
acceptance of its Secured Certificates of any Series, each Certificate 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 Section
4.02(g) hereof, except as expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate 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 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "Senior Holder" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series A Secured Certificates have been
paid in full, the Certificate Holders of Series B until the Secured Obligations
in respect of Series B Secured Certificates have been paid in full.
SECTION 2.16. 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, who shall
represent and warrant that it is a financial intermediary (as defined in Section
8-313(4) of the Massachusetts Uniform Commercial Code), in its name as secured
party hereunder an Eligible Deposit Account entitled "State Street Bank and
Trust Company, as secured party under the Trust Indenture and Security Agreement
[NW 1997 H] dated as of September 25, 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 (2) 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 Trust Indenture.
(d) The Collateral Account Control Agreement shall require State
Street Bank and Trust Company to send confirmation to the Indenture Trustee and
Lessee that it has
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credited the Cash Equivalents to the Collateral Account and to make appropriate
entries on its books identifying the Cash Equivalents as pledged to the
Indenture Trustee.
SECTION 2.17. 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 18 of the Participation
Agreement, at the risk of the Owner Trustee, in Cash Equivalents selected by
Lessee and approved by the Indenture Trustee for the account of the Owner
Trustee in accordance with Section 2.17(b) below; provided, however, that if
Cash Equivalents meeting the requirements of Section 2.17(b) are not available
on any day on which funds are to be invested as contemplated by the preceding
provisions of this Section 2.17(a), the Indenture Trustee may leave such funds
in the Collateral Account uninvested until the earliest of (i) the date on which
an appropriate Cash Equivalent becomes available, (ii) the Delivery Date, (iii)
the date of assumption by Lessee of the Secured Certificates and (iv) the date
of redemption of the Secured Certificates pursuant to Section 2.10(c), (d) or
(e) hereof. The Indenture Trustee shall maintain possession of the negotiable
instruments or securities, if any, evidencing such Cash Equivalents and, in the
case of any Cash Equivalents in book-entry form, such Cash Equivalents shall be
credited to an account of the Indenture Trustee or a financial intermediary with
the applicable Federal Reserve Bank; provided, however, if the account is
credited to 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 Cash Equivalents as pledged to the Indenture
Trustee. All proceeds of and any income, interest and other payments and
distributions on or with respect to any Cash Equivalents 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 Trust Indenture. The
Indenture Trustee shall promptly notify the Owner Trustee and 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 1(a)
of the Participation Agreement in Cash Equivalents selected by Lessee and
approved by the Indenture Trustee for the account of the Owner Trustee which
mature on or prior to May 31, 1998. If the Delivery Date is postponed pursuant
to Section 1(d)(ii)) or Section 1(e) of the Participation Agreement, the
proceeds of the Cash Equivalents referred to in the preceding sentence may be
invested in Cash Equivalents which mature on the rescheduled Delivery Date. If
no Delivery Date occurs, then any Cash Equivalent 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 Cash Equivalent, the Indenture Trustee shall cause the same to be sold in
accordance with standard commercial practices, and Lessee, for the account of
the Owner Trustee, shall forthwith compensate the Indenture Trustee for any
Losses as provided in Section 18(a) of the Participation Agreement.
(d) Pursuant to Section 18(b) of the Participation Agreement,
interest payable on the Certificates during the period in which funds are on
deposit in the Collateral Account shall be paid by Lessee.
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SECTION 2.18. Release of Debt Portion and Lien on the Collateral
Account and the Liquid Collateral on Delivery Date. (a) Subject to the
satisfaction or waiver of the conditions precedent to the Indenture Trustee's
obligations set forth in Section 5(a) of the Participation Agreement, on the
Delivery Date, 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 shall be used to finance a portion of Lessor's Cost as
contemplated by Section 1(d)(i) 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 to Lessee pursuant to Section
18(f) of the Participation Agreement.
(b) The Lien of this Trust Indenture on the Collateral Account and
the Liquid Collateral shall terminate (i) on the Delivery Date following the
transfer of amounts described in Section 1(d)(i) of the Participation Agreement,
(ii) on the date of assumption by Lessee of the Secured Certificates or (iii) on
the date of redemption of the Secured Certificates pursuant to Section 2.10(c),
2.10(d) or 2.10(e) hereof.
SECTION 2.19. Release of Collateral Account. In the case of a
redemption under Section 2.10(c), 2.10(d) or Section 2.10(e) 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 Lessee pursuant to Sections 18(a), 18(c),
18(d) and 18(e) of the Participation Agreement, shall be applied to pay amounts
due under Section 2.12(a) hereof on the 15th day following the Prepayment Date
(in the case of a redemption under Section 2.10(c)), on the 15th day after the
Determination Date (in the case of a redemption under Section 2.10(d)), or the
15th day following the date of occurrence of a Triggering Event (in the case of
a redemption under Section 2.10(e)), as the case may be, and any amount (net of
any uncompensated Losses) remaining after such release and application shall be
remitted by the Indenture Trustee to the Lessee. In the case of an assumption of
the Secured Certificates by Lessee pursuant to Section 1(e)(i) of the
Participation Agreement, the Indenture Trustee shall release from the Collateral
Account all amounts (net of any uncompensated Losses) held in the Collateral
Account on such date to Lessee.
SECTION 2.20. Reoptimization. The Owner Trustee shall have the
right, on the Reoptimization Date, to modify the schedule of principal payments
of the Certificates subject to the terms and conditions set forth in Section
1(c)(ii) of the Participation Agreement. To give effect to the foregoing the
Indenture Trustee shall execute an amendment to this Trust Indenture which shall
set forth the new schedule of principal payments and Schedule I to each Secured
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
Trust Indenture occurs later than the Delivery Date, this Trust Indenture, as
amended, shall, if required, be duly filed for recordation with the FAA.
SECTION 2.21. No Make-Whole Amount. Notwithstanding the provisions
of Section 2.10(b), Section 2.11, Section 2.13 and any other provision of this
Trust Indenture, no
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Make-Whole Amount shall be payable in connection with the redemption or purchase
of the Secured Certificates of any Series if such redemption or purchase occurs
on or after the MakeWhole Termination Date for such Series.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Rent Distribution. Except as otherwise provided in
Section 3.03 hereof, each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by the Indenture
Trustee pursuant to Section 4.03 hereof and pursuant to Section 18(b) or 18(c)
of the Participation Agreement shall be promptly distributed 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 Secured Certificates shall be distributed to the Certificate
Holders of Series A 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 Secured Certificate bears to the aggregate amount of the
payments then due under all Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining 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 Secured Certificates shall be distributed to the Certificate Holders of
Series B 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 Secured Certificate bears to the aggregate amount of the payments
then due under all Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining 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 Secured Certificates shall be distributed to the Certificate Holders of
Series C 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 Secured Certificate bears to the aggregate amount of the payments
then due under all Series C Secured Certificates; and
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Second: the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee; provided, however,
that if an Event of Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause "Second"
but shall be held by the Indenture Trustee as part of the Trust Indenture
Estate and invested in accordance with Section 5.09 hereof until whichever
of the following shall first occur: (i) all Events of Default shall have
been cured or waived, in which event such balance shall be distributed as
provided in this clause "Second" without reference to this proviso, (ii)
Section 3.03 hereof shall be applicable, in which event such balance shall
be distributed in accordance with the provisions of such Section 3.03, or
(iii) the 120th day after the receipt of such payment in which case such
payment shall be distributed as provided in this clause "Second" without
reference to this proviso.
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing. Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
First: (a) to reimburse the Indenture Trustee and the Certificate
Holders for any reasonable costs or expenses incurred in connection with
such redemption for which they are entitled to reimbursement, or indemnity
by Lessee, under the Operative Documents and then (b) to pay any other
amounts then due to the Indenture Trustee and the Certificate Holders
under this Trust Indenture, the Participation Agreement or the Secured
Certificates;
Second: (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable in respect of the Series B
Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in respect of
the Series C Secured Certificates; and
Third: as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall
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be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided
that such moneys shall be invested as provided in Section 5.09 hereof) as
additional security for the obligations of Lessee under the Lessee Operative
Documents and, unless otherwise applied pursuant to the Lease, such proceeds
(and such investment earnings) shall be released to Lessee at Lessee's written
request upon the release of such damaged Airframe or Engine and the replacement
thereof as provided in the Lease.
SECTION 3.03. After Event of Default. Except as otherwise provided
in Section 3.04 hereof, all payments received and amounts held or realized by
the Indenture Trustee (including any amounts realized by the Indenture Trustee
from the exercise of any remedies pursuant to Section 15 of the Lease or Article
IV hereof) after both an Event of Default shall have occurred and be continuing
and the Secured Certificates shall have become due and payable pursuant to
Section 4.04(b) hereof, as well as all payments or amounts then held by the
Indenture Trustee as part of the Trust Indenture Estate, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
First: so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense 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 (all such
property being herein called the "Mortgaged Property") pursuant to Section
4.05(b) hereof) incurred by the Indenture Trustee (to the extent not
previously reimbursed), the expenses of any sale, taking or other
proceeding, reasonable attorneys' fees and expenses, court costs, and any
other expenditures incurred or expenditures or advances made by the
Indenture Trustee or the Certificate Holders in the protection, exercise
or enforcement of any right, power or remedy or any damages sustained by
the Indenture Trustee or any Certificate Holder, liquidated or otherwise,
upon such Event of Default shall be applied by the Indenture Trustee as
between itself and the Certificate Holders in reimbursement of such
expenses and any other expenses for which the Indenture Trustee or the
Certificate Holders are entitled to reimbursement under any Operative
Document and in the case the aggregate amount to be so distributed is
insufficient to pay as aforesaid, then ratably, without priority of one
over the other, in proportion to the amounts owed each hereunder;
Second: so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing or prior
Certificate Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each such
then existing or prior Certificate Holder pursuant to said Section 5.03
hereof;
Third: (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount of all
Series A Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in respect of
the Series A Secured Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series A, and in case the
aggregate amount so
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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 Secured Certificates
held by each holder plus the accrued but unpaid interest and other amounts
due hereunder or thereunder to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series A Secured Certificates
held by all such holders plus the accrued but unpaid interest and other
amounts due thereon 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 Secured Certificates,
and the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series B Secured Certificates
to the date of distribution, shall be distributed to the Certificate
Holders of Series B, 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 Secured Certificates held by each
holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series B Secured Certificates
held by all such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(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 Secured Certificates,
and the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series C Secured Certificates
to the date of distribution, shall be distributed to the Certificate
Holders of Series C, 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 Secured Certificates held by each
holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series C Secured Certificates
held by all such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
Fourth: the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. Certain Payments. (a) Any payments received by the
Indenture Trustee for which no provision as to the application thereof is made
in this Trust Indenture and for which such provision is made in the Lease, the
Participation Agreement or any other Operative Document shall be applied
forthwith to the purpose for which such
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payment was made in accordance with the terms of the Lease, the Participation
Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted].
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made in the
Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any
other Operative Document shall be distributed by the Indenture Trustee to the
extent received or realized at any time (i) prior to the payment in full of all
Secured Obligations due the Certificate Holders, in the order of priority
specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after
payment in full of all Secured Obligations due the Certificate Holders, in the
following order of priority:
First: to the extent payments or amounts described in clause "First"
of Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify against
thereunder, in the manner provided in clause "First" of Section 3.03
hereof, and
Second: in the manner provided in clause "Fourth" of Section 3.03
hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04
hereof, all payments received and amounts realized by the Indenture Trustee
under the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or
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release of the Aircraft after the termination of the Lease with respect
thereto), to the extent received or realized at any time after payment in full
of all Secured Obligations due the Certificate Holders, shall be distributed by
the Indenture Trustee in the order of priority specified in clause (ii) of the
immediately preceding sentence of this Section 3.05.
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire
transfer of funds of the type received by the Indenture Trustee at such office
and to such account or accounts of such entity or entities as shall be
designated by notice from the Owner Trustee to the Indenture Trustee from time
to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and
until the Indenture Trustee receives notice to the contrary from the Owner
Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause
"Second" of Section 3.01 hereof shall be distributed by wire transfer of funds
of the type received by the Indenture Trustee to the Owner Participant's account
(within the time limits contemplated by Section 2.04(a)) specified in Schedule I
to the Participation Agreement.
SECTION 3.07. Application of Payments Under Guarantee. All payments
received by the Indenture Trustee pursuant to the Guarantee shall be distributed
forthwith by the Indenture Trustee in the same order of priority, and in the
same manner, as it would have distributed the payment in respect of which such
payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee. The Owner Trustee hereby
covenants and agrees (the covenants and agreements only in clause (b) below
being made by the Owner Trustee in its individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Secured Certificates and hereunder in accordance with the
terms of the Secured Certificates and this Trust Indenture and all
amounts, if any, payable by it to the Certificate Holders under the
Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to exist
a Lessor Lien attributable to it in its individual capacity with respect
to the Aircraft or any other portion of the Trust Estate; that it will
promptly, at its own expense, take such action as may be necessary to duly
discharge such Lessor Lien attributable to it in its individual capacity;
and that it will make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from such Lessor
Liens attributable to it in its individual capacity;
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(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default, a Default or an Event of Loss, the Owner Trustee will
give prompt written notice of such Event of Default, Default or Event of
Loss to the Indenture Trustee, each Certificate Holder, Lessee and the
Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments furnished
to the Owner Trustee under the Lease, including, without limitation, a
copy of any Termination Notice and a copy of each report or notice
received pursuant to Section 9(a) and 11(c) of the Lease to the extent
that the same shall not have been furnished to the Indenture Trustee
pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the consent
of the Indenture Trustee (acting pursuant to instructions given in
accordance with Section 9.01 hereof), the Owner Trustee will not contract
for, create, incur, assume or suffer to exist 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 be or become contingently
liable, directly or indirectly, in connection with the Debt of any other
person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Operative Documents.
SECTION 4.02. Event of Default. "Event of Default" means any of the
following events (whatever the reason for such Event of Default and whether such
event shall be voluntary or involuntary or come about or be effected by
operation of Law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) any Lease Event of Default (provided that any such Lease Event
of Default caused solely by a failure of Lessee to pay to the Owner
Trustee or the Owner Participant when due any amount that is included in
the definition of Excluded Payments shall not constitute an Event of
Default unless notice is given by the Owner Trustee to the Indenture
Trustee that such failure shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other
amount due and payable under any Secured Certificate or hereunder (other
than any such failure arising by virtue of a tax withheld pursuant to
Section 2.04(b) hereof or as a result of a Lease Event of Default or a
Lease Default) and such failure shall have continued unremedied for ten
Business Days in the case of any payment of Principal Amount or interest
or Make-Whole Amount, if any, thereon and, in the case of any other
amount, for ten Business Days after the Owner Trustee or the Owner
Participant receives written demand from the Indenture Trustee or any
Certificate Holder; or
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(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the Participation
Agreement, or by the Owner Participant pursuant to Section 8(h) of the
Participation Agreement shall remain undischarged for a period of 30 days
after the Owner Trustee and the Owner Participant shall have received
written notice from the Indenture Trustee or any Certificate Holder of
such Lien; or
(d) any representation or warranty made by the Owner Participant or
the Owner Trustee herein, in the Participation Agreement or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents shall prove to have
been false or incorrect when made in any material respect and continues to
be material; and if such misrepresentation is capable of being corrected
and if such correction is being sought diligently, such misrepresentation
shall not have been corrected within 60 days (or, without affecting
Section 4.02(f) hereof, in the case of the representations made in Section
8(c) of the Participation Agreement as to the citizenship of the Owner
Trustee in its individual capacity or of the Owner Participant,
respectively, as soon as is reasonably practicable but in any event within
60 days) following notice thereof from the Indenture Trustee or any
Certificate Holder to the Owner Trustee or the Owner Participant, as the
case may be; or
(e) other than as provided in (c) above or (f) below, any failure by
the Owner Trustee or Owner Participant to observe or perform any other
covenant or obligation of the Owner Trustee or Owner Participant, as the
case may be, for the benefit of the Indenture Trustee or the Certificate
Holders contained in the Participation Agreement, Section 4.01(a) of the
Trust Agreement, the Secured Certificates or this Trust Indenture which is
not remedied within a period of 60 days after notice thereof has been
given to the Owner Trustee and the Owner Participant; or
(f) if at any time when the Aircraft is registered under the laws of
the United States, the Owner Participant shall not be a Citizen of the
United States, and as the result thereof the registration of the Aircraft
under the Federal Aviation Act, and regulations then applicable
thereunder, shall cease to be effective; provided that no Event of Default
shall be deemed to have occurred under this paragraph (f) unless such
circumstances continue unremedied for more than 60 days after the Owner
Participant has Actual Knowledge of the state of facts that resulted in
such ineffectiveness and of such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case
or other proceeding in respect of the Owner Participant, the Owner Trustee
or the Trust Estate under the federal bankruptcy Laws, as now constituted
or hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its
property, or seeking the winding-up or
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liquidation of its affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of 90 consecutive days;
or (ii) the commencement by the Owner Participant, the Owner Trustee or
the Trust Estate of a voluntary case or proceeding under the federal
bankruptcy Laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar Law in
the United States, or the consent by the Owner Participant, the Owner
Trustee or the Trust Estate to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of the Owner Participant, the Owner Trustee or the
Trust Estate or for all or substantially all of its property, or the
making by the Owner Participant, the Owner Trustee or the Trust Estate of
any assignment for the benefit of creditors or the Owner Participant or
the Owner Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g) with
respect to the Owner Participant shall not constitute an Event of Default
if within 30 days of the commencement of the case or proceeding a final
non-appealable order, judgment or decree shall be entered in such case or
proceeding by a court or a trustee, custodian, receiver or liquidator, to
the effect that, no part of the Trust Estate (except for the Owner
Participant's beneficial interest therein) and no right, title or interest
under the Trust Indenture Estate shall be included in, or be subject to,
any declaration or adjudication of, or proceedings with respect to, the
bankruptcy, insolvency or liquidation of the Owner Participant referred to
in this Section 4.02(g).
SECTION 4.03. Certain Rights. The Indenture Trustee shall give the
Certificate Holders, the Owner Trustee and the Owner Participant prompt written
notice of any Event of Default of which the Indenture Trustee has Actual
Knowledge and, if any such Event of Default results from a Lease Event of
Default, shall give the Certificate Holders, the Owner Trustee and the Owner
Participant not less than ten Business Days' prior written notice of the date
(the "Enforcement Date") on or after which the Indenture Trustee may commence
and consummate the exercise of any remedy or remedies described in Section 4.04,
4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the
provisions of Section 15 of the Lease. If an Event of Default shall have
occurred and be continuing, the Owner Trustee shall have the following rights
hereunder, any of which may be exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect
of the nonpayment by Lessee of Basic Rent due under the Lease, the Indenture
Trustee shall have insufficient funds to make any payment of Principal Amount
and interest on any Secured Certificate on the day it becomes due and payable,
the Owner Trustee or the Owner Participant may, but shall not be obligated to,
pay the Indenture Trustee prior to the Enforcement Date, in the manner provided
in Section 2.04 hereof, for application in accordance with Section 3.01 hereof,
an amount equal to the portion of the Principal Amount and interest (including
interest, if any, on any overdue payments of such portion of Principal Amount
and interest) then due and payable on the Secured Certificates, and, unless the
Owner Trustee has cured Events of Default in respect of payments of Basic Rent
on each of the three immediately preceding Basic Rent payment dates, or the
Owner Trustee has cured six previous Events of Default in respect
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of payments of Basic Rent, such payment by the Owner Trustee shall, solely for
purposes of this Trust Indenture be deemed to cure any Event of Default which
would otherwise have arisen on account of the nonpayment by Lessee of such
installment of Basic Rent (but not any other Default or Event of Default which
shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the
Owner Participant may, but shall not be obligated to, cure such Event of Default
prior to the Enforcement Date as is necessary to accomplish the observance or
performance of the defaulted covenant, condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Basic Rent which was overdue at the time of such payment and
interest payable by Lessee on account of its being overdue and any Supplemental
Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant
to the immediately preceding paragraph (but in either case shall have no rights
as a secured party hereunder), and thereafter, the Owner Trustee or the Owner
Participant, as the case may be, shall be entitled to receive such overdue Basic
Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt
thereof by the Indenture Trustee (and shall be entitled to bring an action
against Lessee to enforce such payment); provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Basic Rent, Supplemental Rent and
such interest and (ii) the Owner Trustee shall not be entitled to seek to
recover any such payment (or any payment in lieu thereof) except pursuant to the
foregoing right of subrogation by demand or suit for damages.
SECTION 4.04. Remedies. (a) Subject to the provisions of Section
2.14 hereof, if an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the
Indenture Trustee may, subject to the second paragraph of this Section 4.04(a),
on and after the Enforcement Date if such Event of Default results from a Lease
Event of Default, exercise any or all of the rights and powers and pursue any
and all of the remedies pursuant to this Article IV and shall have and may
exercise all of the rights and remedies of a secured party under the Uniform
Commercial Code and, in the event such Event of Default is also a Lease Event of
Default, any and all of the
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remedies pursuant to Section 15 of the Lease and may take possession of all or
any part of the properties covered or intended to be covered by the Lien created
hereby or pursuant hereto and may exclude the Owner Participant, the Owner
Trustee and Lessee and all persons claiming under any of them wholly or partly
therefrom, provided that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant twenty days' prior written notice of its intention to sell
the Aircraft. 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.
Anything in this Trust Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder as
a result of an Event of Default which arises solely by reason of one or more
events or circumstances which constitute a Lease Event of Default unless the
Indenture Trustee as security assignee of the Owner Trustee shall have exercised
or concurrently be exercising one or more of the remedies provided for in
Section 15 of the Lease to terminate the Lease or take possession and/or sell
the Aircraft; provided, however, that such requirement to exercise one or more
of such remedies under the Lease shall not apply in circumstances where the
Indenture Trustee is, and has been, for a continuous period in excess of 60 days
or such other period as may be specified in Section 1110(a)(1)(A) of the
Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"),
involuntarily stayed or prohibited by applicable law or court order from
exercising such remedies under the Lease (a "Continuous Stay Period"); provided
further, however, that the requirement to exercise one or more of such remedies
under the Lease shall nonetheless be applicable during a Continuous Stay Period
subsequent to the expiration of the Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption
during the Section 1110 Period with the approval of the relevant court of the
Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence
of the Indenture Trustee's own failure to give any requisite notice to any
Person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, so
long as the Indenture Trustee fails to participate in such proceedings, the
Owner Trustee shall have the right (without affecting in any way any rights or
remedy of the Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, 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 any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
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(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate
Holders), subject to Section 4.03 hereof, at any time, by delivery of written
notice or notices to the Owner Trustee and the Owner Participant, declare all
the Secured Certificates to be due and payable, whereupon the unpaid Principal
Amount of all Secured Certificates then outstanding, together with accrued but
unpaid interest thereon (without Make-Whole Amount) and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition that, if
at any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale pursuant
to Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
(d) In the event of any sale of the Trust Indenture Estate, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
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SECTION 4.05. Return of Aircraft, Etc. (a) If an Event of Default
shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof,
at the request of the Indenture Trustee, the Owner Trustee shall promptly
execute and deliver to the Indenture Trustee such instruments of title and other
documents as the Indenture Trustee may deem necessary or advisable to enable the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Mortgaged Property
included in the Trust Indenture Estate to which the Indenture Trustee shall at
the time be entitled hereunder. If the Owner Trustee shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on
the Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by applicable law, and (ii) pursue all
or part of such Mortgaged Property wherever it may be found and, in the event
that a Lease Event of Default has occurred and is continuing, may enter any of
the premises of Lessee wherever such Mortgaged Property may be or be supposed to
be and search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be
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required or authorized to make under any provision of this Trust Indenture, as
well as just and reasonable compensation for the services of the Indenture
Trustee, and of all persons properly engaged and employed by the Indenture
Trustee with respect hereto.
SECTION 4.06. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee specifically or otherwise in this Trust
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in the
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
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the Indenture
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Trust Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall
continue as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Defaults. Upon written instruction from
a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive
any past Default hereunder and its consequences and upon any such waiver such
Default shall cease to exist and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose of this Trust Indenture, but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon; provided that in the absence of written instructions from
all the Certificate Holders, the Indenture Trustee shall not waive any Default
(i) in the payment of the Principal Amount, Make-Whole Amount, if any, and
interest and other amounts due under any Secured Certificate then outstanding,
or (ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Certificate
Holder.
SECTION 4.09. Appointment of Receiver. 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 thereof) for all or any part
of the Mortgaged Property, whether such receivership be incidental to a proposed
sale of the Mortgaged Property or the taking of possession thereof or otherwise,
and the Owner Trustee hereby consents to the appointment of such a receiver and
will not oppose any such appointment. Any receiver appointed for all or
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any part of the Mortgaged Property shall be entitled to exercise all the rights
and powers of the Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc. The Owner Trustee irrevocably appoints the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Certificate Holders to Receive Payment.
Notwithstanding any other provision of this Trust Indenture, the right of any
Certificate Holder to receive payment of principal of, and premium, if any, and
interest on a Secured Certificate on or after the respective due dates expressed
in such Secured Certificate, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the terms hereof,
shall not be impaired or affected without the consent of such Certificate
Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Indenture Trustee
shall have Actual Knowledge of an Event of Default or of a Default arising from
a failure to pay Rent, the Indenture Trustee shall give prompt written notice
thereof to the Owner Trustee, the Owner Participant, Lessee, and each
Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and
5.03 hereof, the Indenture Trustee shall take such action, or refrain from
taking such action, with respect to such Event of Default or Default (including
with respect to the exercise of any rights or remedies hereunder) as the
Indenture Trustee shall be instructed in writing by a Majority in Interest of
Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture
Trustee shall not have received instructions as above provided within 20 days
after mailing notice of such Event of Default to the Certificate Holders, the
Indenture Trustee may, subject to instructions thereafter received pursuant to
the preceding provisions of this Section 5.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Certificate Holders. If the
Indenture Trustee shall at any time declare the Lease to be in default pursuant
to Section 15 thereof or shall elect to foreclose or otherwise enforce this
Trust Indenture, the Indenture Trustee shall forthwith notify the Owner
Participant, the Certificate Holders, the Owner Trustee and Lessee. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the
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Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture
Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall
not be deemed to have knowledge of a Default or an Event of Default (except, in
the case of the Indenture Trustee, the failure of Lessee to pay any installment
of Basic Rent within one Business Day after the same shall become due, if any
portion of such installment was then required to be paid to the Indenture
Trustee, which failure shall constitute knowledge of a Default) unless notified
in writing by Lessee, the Owner Trustee, the Owner Participant or one or more
Certificate Holders.
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Certificate Holders, the Indenture Trustee
shall, subject to the terms of this Section 5.02, take such of the following
actions as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee; provided that
anything contained in this Trust Indenture, the Lease or the other Operative
Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, ▇▇▇ for or otherwise
obtain all amounts included in Excluded Payments from Lessee or the
Guarantor, exercise any election or option or make any decision or
determination or to give or receive any notice, consent, waiver or
approval in respect of any Excluded Payment and seek legal or equitable
remedies to require Lessee or the Guarantor to maintain the insurance
coverage referred to in Section 11 of the Lease; provided that the rights
referred to in this clause (1) shall not be deemed to include the exercise
of any remedies provided for in Section 15 of the Lease other than the
right to proceed by appropriate court action, either at law or in equity,
to enforce payment by Lessee or the Guarantor of such amounts included in
Excluded Payments or performance by Lessee or the Guarantor of such
insurance covenant, or to recover damages for the breach thereof or for
specific performance of any covenant of Lessee or the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event shall
have occurred and be continuing and except as provided in clause (4)
below, the Indenture Trustee shall not, without the consent of the Owner
Trustee, which consent shall not be withheld if no right or interest of
the Owner Trustee or the Owner Participant shall be diminished or impaired
thereby, (i) enter into, execute and deliver amendments, modifications,
waivers or consents in respect of any of the provisions of the Lease, or
(ii)
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approve any accountants, engineers, appraisers or counsel as satisfactory
to render services for or issue opinions to the Owner Trustee pursuant to
the Operative Documents; provided that, whether or not an Event of Default
shall have occurred and be continuing, no amendment, modification, waiver
or consent in respect of the Lease shall affect the amount or timing of,
or the right to enforce payment of, any Excluded Payment;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee, (i)
to receive from Lessee all notices, certificates, reports, filings,
opinions of counsel and other documents and all information which any
thereof is permitted or required to give or furnish to the Owner Trustee
or Lessor pursuant to any Operative Document (including pursuant to
Section 7(b) of the Participation Agreement), (ii) to exercise inspection
rights pursuant to Section 12 of the Lease, (iii) to retain all rights
with respect to insurance maintained for its own account which Section
11(e) of the Lease specifically confers on Lessor or the Owner
Participant, (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor under
Section 21 of the Lease and (v) to give notices of default under Section
14 of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have the
right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated
Loss Values and Termination Values as provided in Section 3(d) of the
Lease and to select counsel with respect to any opinion relating to tax
matters to be delivered solely to the Owner Participant;
(5) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee may, without
the consent of the Indenture Trustee, (i) solicit and make bids with
respect to the Aircraft under Section 9 of the Lease in respect of a
termination of the Lease by Lessee pursuant to Section 9 thereof, (ii)
determine "fair market sales value" and "fair market rental value" under
Section 19 of the Lease for all purposes except following an Event of
Default pursuant to Section 15 of the Lease, and (iii) make an election
pursuant to and in accordance with the provisions of Section 9(c) of the
Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights of
the "Lessor" under the Lease shall be exercised by the Owner Trustee to
the exclusion of the Indenture Trustee including, without limitation, the
right to (i) exercise all rights with respect to Lessee's use and
operation, modification or maintenance of the Aircraft and any Engine
which the Lease specifically confers on Lessor, and (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease; provided that
the foregoing shall not limit (A) any rights separately granted to the
Indenture Trustee under the Operative Documents or (B) the right of the
Indenture Trustee to receive any funds to be delivered to the "Lessor"
under the Lease (except with respect to Excluded Payments) and under the
Purchase Agreement.
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Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall 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 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will 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 specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(a) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. Indemnification. The Indenture Trustee shall not be
under any obligation to take any action under this Trust Indenture and nothing
herein or therein shall require the Indenture Trustee to expend or risk its own
funds or otherwise incur the risk of any financial liability in the performance
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 (the written indemnity of any
Certificate Holder who is a QIB, signed by an authorized officer thereof, in
favor of, delivered to and in form reasonably satisfactory to Indenture Trustee
shall be accepted as reasonable assurance of adequate indemnity). The Indenture
Trustee shall not be required to take any action under Section 5.01 (other than
the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other
provision of this Trust Indenture or any other Operative Document be deemed to
impose a duty on the Indenture Trustee to take any action, if the Indenture
Trustee shall have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
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SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions. The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. 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 Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions. The Owner Trustee and the Indenture Trustee agree that they will
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Aircraft or any other part of the Trust Indenture Estate except
(i) as required by the terms of the Lease or (ii) in accordance with the powers
granted to, or the authority conferred upon, the Owner Trustee and the Indenture
Trustee pursuant to this Trust Indenture and in accordance with the express
terms hereof.
SECTION 5.06. Replacement Airframes and Replacement Engines. At any
time an Airframe or Engine is to be replaced under or pursuant to Section 10 of
the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of
Default is continuing, the Owner Trustee shall direct the Indenture Trustee to
execute and deliver to the Owner Trustee an appropriate instrument releasing
such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture
and the Indenture Trustee shall execute and deliver such instrument as
aforesaid, but only upon compliance by Lessee with the applicable provisions of
Section 10 of the Lease and upon receipt by or deposit with the Indenture
Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be
released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
(A) with respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA registration number (or
other applicable registration information) and manufacturer's
serial number;
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(ii) a description of the Replacement Airframe to be
received (including the manufacturer, model, FAA registration
number (or other applicable registration information) and
manufacturer's serial number) as consideration for the
Airframe to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the Replacement Airframe the
Owner Trustee will be the legal owner of such Replacement
Airframe free and clear of all Liens except as are permitted
by Section 6 of the Lease, that such Replacement Airframe will
on such date be in good working order and condition, and that
such Replacement Airframe has been or, substantially
concurrently with such withdrawal, will be duly registered in
the name of the Owner Trustee under the Federal Aviation Act
or under the law then applicable to the registration of the
Airframe and that an airworthiness certificate has been duly
issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and
that such registration and certificate is in full force and
effect, and that Lessee will have the full right and authority
to use such Replacement Airframe;
(iv) the existence of the insurance required by Section
11 of the Lease with respect to such Replacement Airframe and
the payment of all premiums then due thereon;
(v) that the Replacement Airframe is of the same or an
improved model as the Airframe requested to be released from
this Indenture;
(vi) the fair market value of the Replacement Airframe
as of the date of such certificate (which in the judgment of
Lessee shall be not less than the then fair market 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) the fair market value of the Airframe immediately
prior to the date the Airframe suffered an Event of Loss
(assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(viii) that no Lease Event of Default and no event
which, with lapse of time or notice, or both, would become a
Lease Event of Default, has occurred which has not been
remedied or waived, and that Lessee will not be in default, by
the making and granting of the request for release and the
addition of a Replacement Airframe, in the performance of any
of the terms and covenants of the Lease; and
(ix) that the release of the Airframe so to be released
will not be in contravention of any of the provisions of this
Indenture; or
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(B) with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
(ii) a description of the Replacement Engine (including
the manufacturer's name and serial number) as consideration
for the Engine to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the Replacement Engine the
Owner Trustee will be the legal owner of such Replacement
Engine free and clear of all Liens except as are permitted by
Section 6 of the Lease, that such Replacement Engine will on
such date be in good working order and condition and that such
Replacement Engine is substantially the same as the Engine to
be released (or an improved model);
(iv) the fair market value of the Replacement Engine as
of the date of such certificate (which value shall not be less
than the then fair market value of the Engine to be released
(assuming such Engine was in the condition and repair required
to be maintained under the Lease));
(v) the fair market value of the Engine to be released
(immediately prior to any Event of Loss suffered by such
Engine and assuming that such Engine was in the condition and
repair required to be maintained under the Lease);
(vi) that each of the conditions specified in Section
10(b) of the Lease with respect to such Replacement Engine
have been satisfied and that Lessee will not be in default, by
the making and granting of the request for release and the
addition of the Replacement Engine, in the performance of any
of the terms and covenants of the Lease;
(vii) that, with respect to the replacement of an Engine
pursuant to Section 9(d) of the Lease, no Lease Event of
Default and no Lease Default has occurred which has not been
remedied or waived; and
(viii) that the release of the Engine so to be released
will not be in contravention of any of the provisions of this
Indenture.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be
received as consideration for the Airframe or Engine to be released and
(ii) assigning to the Owner Trustee the benefit of all manufacturer's and
vendor's warranties generally available with respect to such Replacement
Airframe or Replacement Engine, and a Trust Agreement and Indenture
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Supplement subjecting such Replacement Airframe or Replacement Engine and
any related warranty rights to the lien of this Indenture.
(b) With respect to the replacement of any Engine, such Uniform
Commercial Code financing statements covering the lien created by this
Indenture as deemed necessary or desirable by counsel for the Indenture
Trustee to protect the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected
by Lessee confirming the accuracy of the information set forth in clause
(2)A(vi) of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
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 Trust
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be lawfully released from the
lien of this Trust Indenture and all conditions precedent herein
provided 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 Trust
Indenture, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act 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 right, title, estate
and interest of the Owner Trustee to and the lien of this Trust
Indenture on such Replacement Aircraft or Replacement Engine.
SECTION 5.07. Indenture Supplements for Replacements. If a
Replacement Airframe or Replacement Engine is being substituted as contemplated
by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree
for the benefit of the Certificate Holders and Lessee, subject to fulfillment of
the conditions precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the requirements of Section 5.06 hereof with
respect to such Replacement Airframe or Replacement Engine, to execute and
deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as
applicable, as contemplated by Section 10 of the Lease.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of
the Lease, (a) all provisions of this Trust 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
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same airframe or engine or engines, as the case may be, as the Airframe or
Engine or Engines being replaced but for the Event of Loss with respect to the
Airframe or Engine or Engines being replaced, and (b) the provisions of this
Trust Indenture shall no longer be applicable to the Airframe or Engine or
Engines being replaced, which shall be released from the Lien of this Indenture.
SECTION 5.09. Investment of Amounts Held by Indenture Trustee. Any
amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights
to hold monies for security pursuant to Section 22(a) of the Lease shall be held
in accordance with the terms of such Section and the Indenture Trustee agrees,
for the benefit of Lessee, to perform the duties of the Owner Trustee under such
Section. Any amounts held by the Indenture Trustee pursuant to the proviso to
the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any
provision of any other Operative Document providing for amounts to be held by
the Indenture Trustee which are not distributed pursuant to the other provisions
of Article III hereof shall be invested by the Indenture Trustee from time to
time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee
may acquire the same using its best efforts. Unless otherwise expressly provided
in this Trust Indenture, any income realized as a result of any such investment,
net of the Indenture Trustee's reasonable fees and expenses in making such
investment, shall be held and applied by the Indenture Trustee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be charged
against the principal amount invested. The Indenture Trustee shall not be liable
for any loss resulting from any investment required to be made by it under this
Trust Indenture 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 such sale is necessary to
make a distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee
accepts the duties hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Trust Indenture and agrees to receive and
disburse all monies constituting part of the Trust Indenture Estate in
accordance with the terms hereof. The Owner Trustee, in its individual capacity,
and the Indenture Trustee, in its individual capacity, shall not be answerable
or accountable under any circumstances, except (i) for their own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be willful misconduct or negligence), (ii)
in the case of the Indenture Trustee, as provided in the fourth sentence of
Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii)
for liabilities that may result, in the case of the Owner Trustee, from the
inaccuracy of any representation or warranty of the Owner Trustee expressly made
in its individual capacity in the Participation Agreement or in Section 4.01(b)
or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any
Certificate Holder in connection with the transactions contemplated by the
Operative Documents) or, in the case of the
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Indenture Trustee (in its individual capacity), from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in the Participation Agreement or expressly made hereunder. Neither the Owner
Trustee nor the Indenture Trustee shall be liable for any action or inaction of
the other or of the Owner Participant.
SECTION 6.02. Absence of Duties. In the case of the Indenture
Trustee, except in accordance with written instructions furnished pursuant to
Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the
generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner
Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the
Indenture Trustee shall have no duty (i) to see to any registration of the
Aircraft or any recording or filing of the Lease or of this Trust Indenture or
any other document, or to see to the maintenance of any such registration,
recording or filing, (ii) to see to any insurance on the Aircraft or to effect
or maintain any such insurance, whether or not Lessee shall be in default with
respect thereto, (iii) to see to the payment or discharge of any lien or
encumbrance of any kind against any part of the Trust Estate or the Trust
Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive
any financial statements from Lessee, or (v) to inspect the Aircraft at any time
or ascertain or inquire as to the performance or observance of any of Lessee's
covenants under the Lease with respect to the Aircraft. The Owner Participant
shall not have any duty or responsibility hereunder, including, without
limitation, any of the duties mentioned in clauses (i) through (v) above;
provided that nothing contained in this sentence shall limit any obligations of
the Owner Participant under the Participation Agreement or relieve the Owner
Participant from any restriction under Section 4.03 hereof.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR
THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST
AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND
EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee will receive on the
Delivery Date whatever title is conveyed to it by Lessee, and (ii) on the
Delivery Date the Aircraft will be free and clear of Lessor Liens (including for
this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to the Owner Trustee in its individual
capacity. Neither the Owner Trustee, in its individual capacity or as Owner
Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual
or trust capacities, makes or shall be deemed to have made any
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representation or warranty as to the validity, legality or enforceability of
this Trust Indenture, the Trust Agreement, the Participation Agreement, the
Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement or the Guarantee, or as to the correctness
of any statement contained in any thereof, except for the representations and
warranties of the Owner Trustee made in its individual capacity and the
representations and warranties of the Indenture Trustee, in each case expressly
made in this Trust Indenture or in the Participation Agreement. The Loan
Participants, the Certificate Holders and the Owner Participant make no
representation or warranty hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest. Any monies paid
to or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to the Certificate Holders, Lessee or the Owner
Trustee as provided in Article III hereof need not be segregated in any manner
except to the extent required by Law or Section 10(f) or 11(g) of the Lease and
Section 5.09 hereof, and may be deposited under such general conditions as may
be prescribed by Law, and the Indenture Trustee shall not be liable for any
interest thereon (except that the Indenture Trustee shall invest all monies held
as directed by Lessee so long as no Lease Event of Default or Lease Default has
occurred and is continuing (or in the absence of such direction, by the Majority
In Interest of Certificate Holders) in Cash Equivalents; provided, however, that
any payments received, or applied hereunder, by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel. Neither the
Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors (or, in the case of the Owner Participant which
originally executed the Participation Agreement, evidence of the approval by the
Executive Committee thereof) of any party to the Participation Agreement,
certified by the Secretary or an Assistant Secretary thereof as duly adopted and
in full force and effect, as conclusive evidence that such resolution has been
duly adopted and that the same is in full force and effect. As to the aggregate
unpaid Principal Amount of Secured Certificates outstanding as of any date, the
Owner Trustee may for all purposes hereof rely on a certificate signed by any
Vice President or other authorized corporate trust officer of the Indenture
Trustee. As to any fact or matter relating to Lessee the manner of ascertainment
of which is not specifically described herein, the Owner Trustee and the
Indenture Trustee may for all purposes hereof rely on a certificate, signed by a
duly authorized officer of Lessee, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee and the
Indenture Trustee for any action taken or omitted to be taken by them in good
faith in reliance thereon. The Indenture Trustee shall assume, and shall be
fully protected in assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Trust Indenture and to take all action to be taken
by it pursuant to the provisions hereof, and shall not inquire into the
authorization of the Owner Trustee with respect thereto. In the administration
of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may
execute any of the trusts or
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powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee as herein and in the Trust Agreement provided, and
not in its individual capacity, except as otherwise expressly provided herein,
in the Trust Agreement and in the Participation Agreement.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
to reasonable compensation, including expenses and disbursements (including the
reasonable fees and expenses of counsel), for all services rendered hereunder
and shall, on and subsequent to an Event of Default hereunder, have a priority
claim on the Trust Indenture Estate for the payment of such compensation, to the
extent that such compensation shall not be paid by Lessee, and shall have the
right, on and subsequent to an Event of Default hereunder, to use or apply any
monies held by it hereunder in the Trust Indenture Estate toward such payments.
The Indenture Trustee agrees that it shall have no right against the Loan
Participants, the Certificate Holders, the Owner Trustee or the Owner
Participant for any fee as compensation for its services as trustee under this
Trust Indenture.
SECTION 6.08. Instructions from Certificate Holders. In the
administration of the trusts created hereunder, the Indenture Trustee shall have
the right to seek instructions from a Majority in Interest of Certificate
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Indenture Trustee's duties or obligations
hereunder be unclear, and the Indenture Trustee shall incur no liability in
refraining from acting until it receives such instructions. The Indenture
Trustee shall be fully protected for acting in accordance with any instructions
received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, hereby agrees, except as
otherwise provided in Section 2.03 hereof, to assume liability for, and does
hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its
individual and trust capacities), and its successors, assigns, agents and
servants, 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 Trust Indenture), claims, actions, suits, costs, expenses or
disbursements (including reasonable 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 indemnified against by any other Person
under any other document) in any way relating to or arising out of this
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any other Operative Document to which it is a party 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, non-acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of the Aircraft or any Engine (including, without
limitation, latent or 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, to the extent not reimbursed by
Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior
to seeking indemnification from the Trust Indenture Estate, it will demand, and
take such action as it may in its discretion determine to be reasonable to
pursue, indemnification available to the Indenture Trustee under the Lease or
the Participation Agreement. Notwithstanding the foregoing, the Indenture
Trustee shall not be entitled to any indemnification for any Expenses to the
extent relating to or arising from the willful misconduct or gross negligence
(or negligence in the case of handling funds) of the Indenture Trustee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in
the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms
of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's
indemnities under such Sections. In addition, if necessary, 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 Section 7.01 to the
extent not reimbursed by 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.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
including upon 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, Lessee and the Certificate Holders.
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
Successor. (a) The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in
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writing delivered to the Owner Trustee, Lessee, the Owner Participant and the
Indenture Trustee, and the Indenture Trustee shall promptly notify each
Certificate Holder thereof in writing, such removal to be effective upon the
acceptance of the trusteeship by a successor Indenture Trustee. In the case of
the resignation or removal of the Indenture Trustee, a Majority in Interest of
Certificate Holders may appoint a successor Indenture Trustee by an instrument
signed by such holders, which successor, so long as no Lease Event of Default
shall have occurred and be continuing, shall be subject to Lessee's reasonable
approval. 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 Owner Participant or any Certificate 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 above
provided. The successor Indenture Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a
bank or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act.
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SECTION 8.03. Appointment of Additional and Separate Trustees. (a)
Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order
to conform to any law of any jurisdiction in which all or any part of the Trust
Indenture Estate shall be situated or to make any claim or bring any suit with
respect to or in connection with the Trust Indenture Estate, this Trust
Indenture, any other Indenture Agreement, the Secured Certificates or any of the
transactions contemplated by the Participation Agreement, (ii) the Indenture
Trustee shall be advised by counsel satisfactory to it that it is so necessary
or prudent in the interests of the Certificate Holders (and the Indenture
Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture
Trustee shall have been requested to do so by a Majority in Interest of
Certificate Holders, then in any such case, the Indenture Trustee and, upon the
written request of the Indenture Trustee, the Owner Trustee, shall execute and
deliver an indenture supplemental hereto and such other instruments as may from
time to time be necessary or advisable either (1) to constitute one or more bank
or trust companies or one or more persons approved by the Indenture Trustee,
either to act jointly with the Indenture Trustee as additional trustee or
trustees of all or any part of the Trust Indenture Estate, or to act as separate
trustee or trustees of all or any part of the Trust Indenture Estate, in each
case with such rights, powers, duties and obligations consistent with this Trust
Indenture as may be provided in such supplemental indenture or other instruments
as the Indenture Trustee or a Majority in Interest of Certificate Holders may
deem necessary or advisable, or (2) to clarify, add to or subtract from the
rights, powers, duties and obligations theretofore granted any such additional
and separate trustee, subject in each case to the remaining provisions of this
Section 8.03. If the Owner Trustee shall not have taken any action requested of
it under this Section 8.03(a) that is permitted or required by its terms within
15 days after the receipt of a written request from the Indenture Trustee so to
do, or if an Event of Default shall have occurred and be continuing, the
Indenture Trustee may act under the foregoing provisions of this Section 8.03(a)
without the concurrence of the Owner Trustee; and the Owner Trustee hereby
irrevocably appoints (which appointment is coupled with an interest) the
Indenture Trustee, its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 8.03(a) in either of such contingencies.
The Indenture Trustee may, in such capacity, execute, deliver and perform any
such supplemental indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the clarification
of, addition to or subtraction from the rights, powers, duties or obligations
theretofore granted to any such additional or separate trustee. In case any
additional or separate trustee appointed under this Section 8.03(a) shall die,
become incapable of acting, resign or be removed, all the assets, property,
rights, powers, trusts, duties and obligations of such additional or separate
trustee shall revert to the Indenture Trustee until a successor additional or
separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture
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Trustee and such additional or separate trustee jointly except to the extent
that applicable Law of any jurisdiction in which any particular act is to be
performed renders the Indenture Trustee incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations (including
the holding of title to all or part of the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional or separate
trustee. No additional or separate trustee shall take any discretionary action
except on the instructions of the Indenture Trustee or a Majority in Interest of
Certificate Holders. No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, except that the Indenture
Trustee shall be liable for the consequences of its lack of reasonable care in
selecting, and Indenture Trustee's own actions in acting with, any additional or
separate trustee. Each additional or separate trustee appointed pursuant to this
Section 8.03 shall be subject to, and shall have the benefit of Articles IV
through VIII and Article X hereof insofar as they apply to the Indenture
Trustee. The powers of any additional or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations. (a) Except as
provided in Section 5.02 hereof, and except with respect to Excluded Payments,
the Owner Trustee agrees it shall not enter into any amendment of or supplement
to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement or the Guarantee, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, unless such supplement, amendment, waiver, modification or
consent is consented to in writing by the Indenture Trustee and a Majority in
Interest of Certificate Holders. Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of any of the Certificate
Holders (or the Indenture Trustee, in the case of (i) or (ii) below), (i) any
Excluded Payments payable to the Owner Participant may be modified, amended,
changed or waived in such manner as shall be agreed to by the Owner Participant
and Lessee, (ii) the Owner Trustee and Lessee may enter into amendments
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of or additions to the Lease to modify Section 5 (except to the extent that such
amendment would affect the rights or exercise of remedies under Section 15 of
the Lease), Section 9 or Section 19 of the Lease so long as such amendments,
modifications and changes do not and would not affect the time of, or reduce the
amount of, Rent payments until after the payment in full of all Secured
Obligations or otherwise adversely affect the Certificate Holders and (iii) the
Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee may enter into an indenture or indentures supplemental hereto to effect
the amendments contemplated by Section 1(c) of the Participation Agreement,
subject to the limitations set forth therein.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but upon the written request of a Majority in Interest of Certificate
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each holder of
an affected Secured Certificate then outstanding, no such amendment of or
supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the
Participation Agreement or waiver or modification of the terms of, or consent
under, any thereof, shall (i) modify any of the provisions of this Section 9.01,
or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06
hereof, Section 14 (except to add an Event of Default) of the Lease, the
definitions of "Event of Default", "Default", "Lease Event of Default", "Lease
Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or
"Certificate Holder", or the percentage of Certificate Holders required to take
or approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Principal Amount, Make-Whole
Amount, if any, or interest with respect to any Secured Certificate, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the
Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend
any indemnities in favor of the Certificate Holders, (iv) consent to any change
in the Trust Indenture or the Lease which would permit redemption of Secured
Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the
purchase of the Secured Certificates other than as permitted by Section 2.14
hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or
altering the absolute and unconditional character of the obligations of Lessee
to pay Rent as set forth in
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Sections 3 and 18 of the Lease or (vi) permit the creation of any Lien on the
Trust Indenture Estate or any part thereof other than Permitted Liens or deprive
any Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date hereof, the Owner Trustee and the
Indenture Trustee may enter into one or more agreements supplemental hereto
without the consent of any Certificate Holder for any of the following purposes:
(i) (a) to cure any defect or inconsistency herein or in the Secured
Certificates, or to make any change not inconsistent with the provisions hereof
(provided that such change does not adversely affect the interests of any
Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure
any ambiguity or correct any mistake; (ii) to evidence the succession of another
party as the Owner Trustee in accordance with the terms of the Trust Agreement
or to evidence the succession of a new trustee hereunder pursuant hereto, the
removal of the trustee hereunder or the appointment of any co-trustee or
co-trustees or any separate or additional trustee or trustees; (iii) to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee or to make any other provisions with respect to matters or questions
arising hereunder so long as such action shall not adversely affect the
interests of the Certificate Holders in its capacity solely as Certificate
Holder; (iv) to correct or amplify the description of any property at any time
subject to the Lien of this Trust 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 Trust Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Certificate Holders, or to surrender any
rights or power herein conferred upon the Owner Trustee, the Owner Participant
or Lessee; (vi) to add to the rights of the Certificate Holders; (vii) to
include on the Secured Certificates any legend as may be required by law, and
(viii) to effect the amendments and/or restatements contemplated by Section 1(c)
of the Participation Agreement, subject to the limitations set forth therein.
SECTION 9.02. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of Section 9.01 hereof adversely affects any right,
duty, immunity or indemnity with respect to such institution under this Trust
Indenture or the Lease, such institution may in its discretion decline to
execute such document.
SECTION 9.03. Documents Mailed to Certificate Holders. Promptly
after the execution by the Owner Trustee or the Indenture Trustee of any
document entered into pursuant to Section 9.01 hereof, the Indenture Trustee
shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and
to each Certificate Holder at its address last set forth in the Secured
Certificate Register, but the failure of the Indenture Trustee to mail such
copies shall not impair or affect the validity of such document.
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SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement. No written request or consent of the
Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to
Section 9.01 hereof shall be required to enable the Owner Trustee to enter into
any Lease Supplement specifically required by the terms of the Lease or to
execute and deliver a Trust Agreement and Indenture Supplement specifically
required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, 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 and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders. No holder of a Secured Certificate shall have legal title
to any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding. Any
sale or other conveyance of the Trust Indenture Estate, or any part thereof
(including any part thereof or interest therein), by the Indenture Trustee made
pursuant to the terms of this Trust Indenture shall bind the Certificate Holders
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
in and to such Trust Indenture Estate or part thereof. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity
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of such sale or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Indenture Trustee.
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Certificate Holders. Nothing in
this Trust Indenture, whether express or implied, shall be construed to give any
person other than the Owner Trustee, the Indenture Trustee, the Owner
Participant, Lessee and the Certificate Holders, any legal or equitable right,
remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. 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 Trust
Indenture to be made, given, furnished or filed shall be in writing, personally
delivered or mailed by certified mail, postage prepaid, or by facsimile or
confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office
at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Department (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to the Owner Participant
addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee,
addressed to it at its office at Two ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. 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 Trust Indenture.
SECTION 10.06. Severability. Any provision of this Trust 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. Any such
prohibition or unenforceability in any particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing Waivers. No term
or provision of this Trust Indenture or the Secured Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the Owner Trustee and the Indenture Trustee, in compliance with
Section 9.01 hereof. Any waiver of the terms hereof or of any Secured
Certificate shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto
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and the permitted successors and assigns of each, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by any
Certificate Holder shall bind the successors and assigns of such holder. This
Trust 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
Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended
and supplemented from time to time to the extent permitted hereby, thereby and
by the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. Headings. The headings of the various Articles and
sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.10. Normal Commercial Relations. Anything contained in
this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the
Indenture Trustee, any Participant or any bank or other Affiliate of such
Participant may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with Lessee, fully to the same extent
as if this Trust Indenture were not in effect, including without limitation the
making of loans or other extensions of credit to Lessee for any purpose
whatsoever, whether related to any of the transactions contemplated hereby or
otherwise.
SECTION 10.11. Governing Law; Counterpart Form. THIS TRUST INDENTURE
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE
OF NEW YORK. This Trust Indenture may be executed by the parties hereto in
separate counterparts (or upon separate signature pages bound together into one
or more 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 10.12. Voting by Certificate Holders. All votes of the
Certificate Holders shall be governed by a vote of a Majority in Interest of
Certificate Holders, except as otherwise provided herein.
SECTION 10.13. Bankruptcy. It is the intention of the parties that
the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as
assignee of the Owner Trustee hereunder), shall be entitled to the benefits of
Section 1110 with respect to the right to take possession of the Aircraft,
Airframe, Engines and Parts as provided in the Lease in the event of a case
under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any
instance where more than one construction is possible of the terms and
conditions hereof or any other pertinent Operative Document, each such party
agrees that a construction which
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would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. No Action Contrary to Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Owner Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee, Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 H]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 H], dated
_______ __, _____ (herein called this "Trust Indenture Supplement") of FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Owner Trustee (herein called the "Owner Trustee") under that certain Trust
Agreement [NW 1997 H] dated as of September 25, 1997 (the "Trust Agreement"),
between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the TRUST INDENTURE AND SECURITY AGREEMENT [NW
1997 H], dated as of September 25, 1997 (as amended and supplemented to the date
hereof, the "Trust Indenture") between the Owner Trustee and STATE STREET BANK
AND TRUST COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for
the execution and delivery of a supplement thereto substantially in the form
hereof, which shall particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
A-2
As further security for the obligations referred to above and
secured by the Trust 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 Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
A-3
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Owner Trustee
By:
-------------------------------------
Name:
Title:
A-4
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A......... $10,369,450.52 7.068%
Series B......... $3,112,327.96 7.248%
Series C......... $1,967,999.99 7.039%
Schedule I-1
Secured Certificates Amortization
SERIES A
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
Schedule I-2
SERIES B
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
Schedule I-3
SERIES C
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
Schedule I-4
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1A, dated as
of September 25, 1997.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1B, dated as
of September 25, 1997.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1C, dated as
of September 25, 1997.
Schedule II-1
ANNEX A [NW 1997 H]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings for all purposes of the Operative Documents referred to
below which are being executed and delivered on or prior to the Certificate
Closing Date (as such term is defined below) and shall be equally applicable to
both the singular and the plural forms of the terms herein defined. In the case
of any conflict between the provisions of this Annex A and the provisions of any
Operative Document, the provisions of such Operative Document shall control the
construction of such Operative Document.
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Affiliate" means, with respect to any person, any other person
directly or indirectly 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.
"Aircraft" means the Airframe to be delivered and leased under the
Lease (or any airframe from time to time substituted for such Airframe pursuant
to Section 10(a) of the Lease) together with the four Engines initially leased
under the Lease (or any engine substituted for either of such Engines pursuant
to the terms of the Lease), whether or not any of such initial or substituted
Engines may from time to time be installed on such initial or substituted
Airframe or may be installed on any other airframe or on any other aircraft.
Prior to delivery of the Lease, references in the Operative Documents to
Aircraft shall mean the British Aerospace Avro 146-R585A airframe bearing
manufacturer's serial number E2318 and anticipated to bear FAA registration
number N508XJ, together with four AlliedSignal LF507 type engines.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A aircraft
(except Engines or engines from time to time installed thereon) specified in the
initial Lease Supplement, which aircraft shall be leased by Lessor to Lessee
under the Lease and under such Lease Supplement, and any aircraft (except
Engines or engines from time to time installed thereon) which may from time to
time be substituted for such aircraft (except Engines or engines from time to
time installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a) of the Lease; and (ii) any and all Parts (A) so long as the same
shall be incorporated or installed in or attached to such aircraft (except
Engines or engines from time to
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time installed thereon), or (B) so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 8 of the Lease after removal from
such aircraft (except Engines or engines from time to time installed thereon);
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
under the Lease in substitution for the Airframe pursuant to the applicable
provisions of the Lease, the replaced Airframe shall cease to be an Airframe
under the Lease.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 of the Trust Indenture.
"Applicable Rate" means as of any date the weighted average of the
interest rates borne by the Secured Certificates then outstanding and, if no
Secured Certificates shall be outstanding, the Base Rate.
"Assumptions" has the meaning set forth in Section 1(c)(ii) of the
Participation Agreement.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "Remaining Weighted Average Life" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such Secured
Certificate, by (ii) the number of days from and including the redemption date
to but excluding the scheduled payment date of such principal installment; by
(b) the then unpaid principal amount of such Secured Certificate.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or supersedes
such provisions.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base rate.
"Basic Rent" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) of the Lease as adjusted as provided in
Section 3(d) of the Lease but subject always to the provisions of Section
3(d)(v) of the Lease and, for any Renewal Term, Basic Rent determined pursuant
to Section 19 of the Lease.
"Basic Term" means the term for which the Aircraft is to be leased
under the Lease pursuant to Section 3(a) of the Lease commencing on the Delivery
Date and ending on a date approximately 20 years later, or such earlier date as
the Lease may be terminated in accordance with the provisions of the Lease.
-3-
"Beneficial Interest" means the interest of the Owner Participant
(or the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"▇▇▇▇ of Sale" means a full warranty ▇▇▇▇ of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the Delivery
Date, specifically referring to the Airframe and each Engine, which ▇▇▇▇ of Sale
shall contain, among other things, a statement that such ▇▇▇▇ of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such ▇▇▇▇ of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the Lease.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in the City of
New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"Cash Equivalents" (i) on or prior to the earliest to occur of (i)
the Delivery Date, (ii) the date of assumption by Lessee of the Secured
Certificates and (iii) the date of redemption of the Secured Certificates
pursuant to Section 2.10(c), (d) or (e) of the Trust Indenture, shall mean (a)
direct obligations of the United States or obligations fully guaranteed by the
United States, (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 eight months 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 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, and (ii) after
the date specified in clause (i) above, shall mean the investments specified in
Section 22(a) of the form of Lease attached as Exhibit C to the Participation
Agreement.
"Certificate Closing" means the closing of the transactions to be
consummated on the Certificate Closing Date.
"Certificate Closing Date" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees contemplated
by Section 1(a) of the Participation Agreement.
"Certificate Closing Documents" has the meaning specified in Section
4(a)(iii) of the Participation Agreement.
-4-
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code or any similar legislation of
the United States of America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet
Program currently administered by the United States Air Force Air Mobility
Command pursuant to Executive Order No. 11490, as amended, or any substantially
similar program.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Account" means the deposit account established and
maintained pursuant to Section 2.16 of the Trust Indenture.
"Collateral Account Control Agreement" means the Collateral Account
Control Agreement [NW 1997 H], dated as of September 25, 1997, among State
Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee.
"Commitment" means the amount of the Owner Participant's
participation in Lessor's Cost for the Aircraft required to be made available or
paid as provided in Section 1(d) of the Participation Agreement.
"Consent and Agreement" means the Consent and Agreement [NW 1997 H],
substantially in the form attached to the form of Purchase Agreement Assignment
attached as Exhibit B to the Participation Agreement to be dated as of and
entered into on the Delivery Date, executed by the Manufacturer, as the same may
be amended, modified or supplemented from time to time in accordance with the
applicable provisions thereof.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Contract Rights" means all of Lessee's right, title and interest in
and to Part H and Part J of the Manufacturer Support Agreement, as and to the
extent that the same relate to the warranties with respect to the Aircraft,
including, without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer under Part H or
Part J of the Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and Part J of
the Manufacturer
-5-
Support Agreement in respect of the Aircraft and all claims thereunder and (b)
any and all rights of Lessee to compel performance of the terms of Part H and
Part J of the Manufacturer Support Agreement in support thereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department, 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 Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal 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 Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Cut-Off Date" means the earlier of (x) the Prepayment Date and (y)
the 90th day after the last day of the calendar month in which the Manufacturer
Delivery occurs.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Portion" means the amount specified as such on Schedule II to
the Participation Agreement.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" (a) for purposes of the Operative Documents other than the
Trust Indenture, means any event which with the giving of notice or the lapse of
time or both would become an Event of Default (as defined for purposes of the
Operative Documents other than the Trust Indenture) and (b) for purposes of the
Trust Indenture, means any condition or event that with the giving of notice or
the lapse of time or both would become an Event of Default pursuant to Section
4.02 of the Trust Indenture or Lease Event of Default (excluding Lease Events of
Default relating to Excluded Payments).
"Delivery Date" means the date of the initial Lease Supplement for
the Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee under the Lease.
"Delivery Date Closing" means the closing of the transactions to be
consummated on the Delivery Closing Date.
-6-
"Delivery Documents" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"Delivery Notice" means notice of the Aircraft's Delivery Date,
given by the Lessee as provided in Section 2 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by Lessee
pursuant to Section 1(e)(iii) of the Participation Agreement.
"Depreciation Period" means the period commencing on the Delivery
Date and ending on the eighth December 31st thereafter, or such earlier date as
the Lease may be terminated in accordance with the provisions thereof.
"Determination Date" means the earlier of (i) the 30th day following
the CutOff Date and (ii) the Prepayment Date.
"Dollars" and "$" means the lawful currency of the United States of
America.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with a corporate
trust department of a depository institution with corporate trust powers
organized under the laws 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" means 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
case at all times (a) has either (x) a long-term unsecured debt rating of 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 at 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.
"Enforcement Date" shall have meaning specified in Section 4.03 of
the Trust Indenture.
"Engine" means (i) each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the initial Lease Supplement, whether
or not from time to time thereafter installed on the Airframe or installed on
any other airframe or on any other aircraft; and (ii) any engine which may from
time to time be substituted, pursuant to the terms of the Lease, for either of
such four engines, together in each case with any and all Parts incorporated or
installed in or attached thereto or any and all Parts removed therefrom so long
as title thereto shall remain vested in Lessor in accordance with the terms of
Section 8 of the Lease after removal from such Engine; provided, however, that
at such time as an engine shall be deemed part of the property leased under the
Lease in substitution for an Engine pursuant to the applicable provisions of the
Lease, the replaced Engine shall cease to be an Engine
-7-
hereunder. The term "Engines" means, as of any date of determination, all
Engines then leased under the Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of the Participation Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"Event of Default" (a) for purposes of the Trust Indenture, has the
meaning specified in Section 4.02 of the Trust Indenture and (b) for purposes of
the Operative Documents other than the Trust Indenture, means each of the
following events (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, but only as long as,
such event shall not have been remedied:
(x) Lessee shall have failed to make any payment under the Participation
Agreement after the same shall have become due and such failure
shall continue for ten (10) Business Days after Lessee's receipt of
written demand therefor by the party entitled thereto (provided that
any failure of Lessee to pay to Lessor when due any Excluded
Payments (as defined in the Trust Indenture) shall not constitute an
Event of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall constitute
an Event of Default); or
(y) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or
agreement to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of
thirty (30) days after receipt by Lessee of written notice thereof
from the Indenture Trustee; or
(z) any representation or warranty made by Lessee in the Participation
Agreement or any document or certificate furnished by Lessee in
connection therewith or pursuant thereto (except for representations
or warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement or any document or instrument furnished
pursuant to either thereof) shall prove to have been incorrect in
any material respect at the time made and such incorrectness shall
not have been cured (to the extent of the adverse impact of such
incorrectness on the interests of the Owner Trustee or the
Certificate Holders) within thirty (30) days after the receipt by
Lessee of a written notice from the Indenture Trustee advising
Lessee of the existence of such incorrectness.
"Event of Loss" with respect to the Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the loss of
such property or of the
-8-
use thereof due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by Lessee (or any Sublessee) for any reason whatsoever; (ii) any damage to
such property which results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or compromised total
loss; (iii) the theft or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of, such
property (other than a requisition for use by the United States Government or
any other government of registry of the Aircraft, or any agency or
instrumentality of any thereof) which in the case of any event referred to in
this clause (iii) (other than a requisition of title) shall have resulted in the
loss of possession of such property by Lessee (or any Sublessee) for a period in
excess of 180 consecutive days or, in the case of a requisition of title, the
requisition of title shall not have been reversed within 90 days from the date
of such requisition of title; (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration or other
governmental body of the government of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of the business of
air transportation shall have been prohibited for a period of 180 consecutive
days, unless Lessee (or any Sublessee), prior to the expiration of such 180 day
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit the normal use of such property by
Lessee (or such Sublessee), but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no Event of Loss
shall be deemed to have occurred if such prohibition has been applicable to the
entire U.S. registered fleet of British Aerospace Avro 146-RJ85A aircraft of
Lessee (or any Sublessee) and Lessee (or a Sublessee), prior to the expiration
of such two-year period, shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such jurisdiction and
shall be diligently carrying forward, in a manner which does not discriminate
against the Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the Aircraft by Lessee (or
such Sublessee), but in any event if such use shall have been prohibited for a
period of three years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, which shall have occurred during the Basic Term (or any Renewal Term)
and shall have continued for thirty (30) days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (v) shall exist if Lessor
shall have furnished to Lessee the written notice specified in Section 10(d) of
the Lease; and (vi) any divestiture of title to or interest in an Engine treated
as an Event of Loss pursuant to Section 7(b) of the Lease. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.
"Excess Amount", for purposes of the Trust Indenture, shall have the
meaning specified in Section 2.03(b) of the Trust Indenture and, for purposes of
the Operative Documents other than the Trust Indenture, means for a Lease Period
Date an amount equal to the amount determined by multiplying Lessor's Cost by
the percentage set forth in Exhibit B to the Lease under the heading "Excess
Amount" opposite such Lease Period Date.
-9-
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 of the Trust Indenture, the amounts
payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of
the Lease plus all reasonable expenses incurred by the Owner Trustee and the
Owner Participant in connection with such assumption, as applicable, (vii) any
payment of the foregoing under the Guarantee, (viii) interest accrued on any of
the above, and (ix) any right to enforce the payment of any amount described in
clauses (i) through (viii) above and the right to declare an Event of Default in
respect of any of the foregoing amounts.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA ▇▇▇▇ of Sale" means a ▇▇▇▇ of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the United
States government succeeding to their functions.
"Foreign Air Carrier" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and inspections
for the Aircraft, Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those required by, the
Federal Aviation Administration, the Civil Aviation Authority of the United
Kingdom, the Direction Generale de l'Aviation Civile of the French Republic, the
Luftfahrt Bundesamt of the Federal Republic of Germany, the Rijflauchtraatdienst
of the Kingdom of the Netherlands, the Ministry of Transportation of
-▇▇-
▇▇▇▇▇ or the Federal Ministry of Transport of Canada (and any agency or
instrumentality of the applicable government succeeding to the functions of any
of the foregoing entities).
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Documents or
relating to the observance or performance of the obligations of any of the
parties to the Operative Documents.
"Guarantee" means the Guarantee [NW 1997 H], dated as of the
Certificate Closing Date, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable provisions
thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means (i) the Owner Trustee, in its individual capacity
and as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii) the
Owner Participant, (iv) the Trust Estate, (v) the Loan Participants and each
other Certificate Holder, (vi) the Subordination Agent, (vii) the Liquidity
Provider, (viii) the Pass Through Trustees, (ix) each Affiliate of the Persons
described in clauses (i) through (iv), inclusive, (x) each Affiliate of the
Persons described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the Persons
described in clauses (i) through (viii), inclusive, (xii) the successors and
permitted assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Default" means any event or condition that with the
giving of notice or the lapse of time or both would become an Indenture Event of
Default or Lease Event of Default (excluding Lease Events of Default related to
Excluded Payments).
"Indenture Event of Default" shall mean an "Event of Default" as
defined in clause (a) of the definition of "Event of Default".
"Indenture Trustee" means the Indenture Trustee under the Trust
Indenture, and any entity which may from time to time be acting as indenture
trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation Agreement and
the Trust Indenture.
-11-
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified Owner
Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Indenture Trustee's Liens" means any Lien which arises as a result
of (A) claims against the Indenture Trustee not related to its interest in the
Aircraft or the administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the Operative Documents to the
extent such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the indemnification
provided by Section 7 of the Participation Agreement pursuant to said Section 7,
or (D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is continuing and prior to the
time that the Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"Initial Owner Participant" means Lessee.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the Subordination
Agent.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease Agreement", "the Lease Agreement", "the Lease", or "the
Agreement", mean the Lease Agreement [NW 1997 H], substantially in the form of
Exhibit C to the Participation Agreement, to be dated as of and entered into on
the Delivery Date, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof and in accordance
with the Trust Agreement and the Trust Indenture, including, without limitation,
supplementation thereof by one or more Lease Supplements entered into pursuant
to the applicable provisions thereof.
"Lease Default" shall mean a "Default" as defined in clause (a) of
the definition of "Default".
"Lease Event of Default" shall mean an "Event of Default" as defined
in clause (b) of the definition of "Event of Default".
"Lease Period Date" means the first January 2 or July 2 after the
Delivery Date and each January 2 and July 2 thereafter, to and including the
last such date in the Term.
-12-
"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease Agreement, and any subsequent Lease Supplement entered
into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA ▇▇▇▇ of Sale, the ▇▇▇▇ of Sale, the Purchase
Agreement Assignment and the Tax Indemnity Agreement.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA ▇▇▇▇ of Sale and the ▇▇▇▇ of Sale.
"Lessor Liens" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank, National
Association, in its individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii) any act or
omission of the Owner Participant, Lessor, or First Security Bank, National
Association, in its individual capacity, which is not related to the
transactions contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank, National Association, in its
individual capacity, with respect to Taxes or Expenses against which Lessee is
not required to indemnify the Owner Participant, Lessor or First Security Bank,
National Association, in its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner Participant
arising out of any transfer by Lessor or the Owner Participant of all or any
portion of the respective interests of Lessor or the Owner Participant in the
Aircraft, the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement, the transfer
pursuant to the Trust Indenture or a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or pursuant to the exercise of the remedies set
forth in Section 15 thereof, provided, however, that any Lien which is
attributable solely to First Security Bank, National Association or the Owner
Participant and would otherwise constitute a Lessor Lien hereunder shall not
constitute a Lessor Lien hereunder so long as (1) the existence of such Lien
poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any Sublessee), (3)
the existence of such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (4) First Security Bank,
National Association or the Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded Payments in
favor of First Security Bank, National Association or the Owner Participant, as
appropriate).
-13-
"Lessor's Cost" for the Aircraft means the amount denominated as
such in Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease, sublease, sub-sublease or security interest.
"Liquid Collateral" means all amounts and securities deposited from
time to time in the Collateral Account and all of 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, Cash Equivalents 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 Facilities" means the three Revolving Credit Agreements
between the Subordination Agent, as borrower, and the Liquidity Provider, and
any replacement thereof, in each case as the same may be amended, modified or
supplemented.
"Liquidity Provider" means The Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts or
claims against any Loan Participant not related to the transactions contemplated
by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a) of
the Lease.
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to
-14-
maturity of such Secured Certificate computed by discounting each such payment
on a semiannual basis from its respective Payment Date (assuming a 360-day year
of twelve 30-day months) using a discount rate equal to the Treasury Yield
exceeds (b) the outstanding principal amount of such Secured Certificate plus
accrued interest. For purposes of determining the Make-Whole Amount, "Treasury
Yield" at the time of determination with respect to any Secured Certificate
means the interest rate (expressed as a semiannual 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 semiannual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Secured Certificate and trading in the public securities market either
as determined by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading in the
public securities markets, (A) one maturing as close as possible to, but earlier
than, the Average Life Date of such Secured Certificate and (B) the other
maturing as close as possible to, but later than, the Average Life Date of such
Secured 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 Secured Certificate is reported on the
most recent H.15(519), such weekly average yield to maturity as published in
such H.15(519). "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 Amount shall
be the third Business Day prior to the applicable redemption 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 redemption date.
"Make-Whole Termination Date" with respect to the Series A Secured
Certificates, means July 2, 2010; with respect to the Series B Secured
Certificates, means July 2, 2008; and with respect to the Series C Secured
Certificates, means October 2, 2003.
"Mandatory Document Terms" means the terms set forth on Schedule V
to the Participation Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule IV
to the Participation Agreement.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and its
successors and assigns.
"Manufacturer Delivery" means the date the Aircraft is delivered by
the Manufacturer to Lessee, and accepted by Lessee, pursuant to the Purchase
Agreement.
"Manufacturer Documents" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
-15-
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"Mortgaged Property" shall have the meaning specified in Section
3.03 of the Trust Indenture.
"Net Economic Return" shall have the meaning ascribed to such term
in paragraph 2 of Exhibit E to the Lease.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement, an
acceptance certificate covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the Aircraft, the Secured
Certificates, the ▇▇▇▇ of Sale, the FAA ▇▇▇▇ of Sale, the Purchase Agreement
(insofar as it relates to the Aircraft), the Guarantee, the Residual Agreement,
the Collateral Account Control Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated by the
Operative Documents.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean the corporation to whom on the
Delivery Date (or, if earlier, the Transfer Date) the Initial Owner Participant
shall transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter any Person to which such corporation
transfers all or any portion of its right, title and interest in and to the
Trust Agreement, the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of the Trust Agreement and Section 8 of the
Participation Agreement.
"Owner Participant Documents" means the Participation Agreement, the
Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.01 of the Trust Agreement, and references to a predecessor
Owner Trustee in its individual capacity by name in the Operative Documents
shall include such successor Owner Trustee in its individual capacity from and
after such succession.
"Owner Trustee Documents" means the Participation Agreement, the
Trust Agreement, the Trust Supplement covering the Aircraft, the Lease, the
Lease Supplement
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covering the Aircraft, the Purchase Agreement Assignment, the Residual
Agreement, the Trust Indenture and the Secured Certificates.
"Participants" shall mean and include the Loan Participants, the
Initial Owner Participant and the Owner Participant.
"Participation Agreement" means that certain Participation Agreement
[NW 1997 H], dated as of the Certificate Closing Date, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination Agent, the
Initial Owner Participant and Owner Trustee, as such Participation Agreement may
be amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and the
Participants.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than (a)
complete Engines or engines, (b) any items leased by Lessee from a third party
(other than Lessor) and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with Section 8
of the Lease after removal therefrom.
"Pass Through Certificates" means the pass through certificates to
be issued by the Pass Through Trustee in connection with the Overall
Transaction.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the three separate pass through trust supplements referred
to on Schedule I to the Participation Agreement.
"Pass Through Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass Through
Trust Agreement, and each other person that may from time to time be acting as
successor trustee under any such Pass Through Trust Agreement.
"Past Due Rate" (A) with respect to the Secured Certificates, means
the rate per annum equal to 2% over the Debt Rate as in effect from time to time
and (B) for purposes of the Lease, means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be paid by the
Indenture Trustee to the Loan Participants, or the holders of any outstanding
Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in
effect from time to time and (ii) with respect to the remaining portion of any
payment of Rent (and the entire amount of any payment of Rent after the
satisfaction and discharge of the Trust Indenture), a rate per annum equal to 1%
over the Base Rate.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1998 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
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"Permitted Lien" means any Lien referred to in clauses (i) through
(viii) of Section 6 of the Lease.
"Permitted Sublessee" means any entity domiciled in a country listed
in Exhibit F to the Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Lease" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"Prepayment Date" means June 15, 1998.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"Purchase Agreement" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates to
the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1997 H], dated as of the Delivery Date and substantially in the
form of Exhibit B to the Participation Agreement, between Lessee and Lessor, as
the same may be amended, supplemented or modified from time to time, with a form
of Consent and Agreement to be executed by the Manufacturer attached thereto.
"Purchasers" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"QIB" shall have the meaning specified in Section 2.08 of the Trust
Indenture.
"Rating Agencies" means collectively, at any time, each nationally
recognized 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 shall be S&P and ▇▇▇▇▇'▇.
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"Rating Agency Confirmation" means, with respect to any Operative
Document 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 Document 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.
"Related Indemnitee Group" means, with respect to any Indemnitee,
any officer, director, servant, employee, agent or Affiliate thereof.
"Renewal Term" shall mean any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Reoptimization Date" has the meaning set forth in Section 1(c)(ii)
of the Participation Agreement.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"Residual Agreement" means the Residual Value Agreement (N508XJ),
dated as of the Delivery Date, among the Manufacturer, the Owner Participant and
the Owner Trustee.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"S&P" means Standard & Poor's Ratings Group.
"Scheduled Delivery Date" means the delivery date specified in the
Delivery Notice pursuant to Section 2 of the Participation Agreement.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Secured Certificates" shall mean and include any Secured
Certificates issued under the Trust Indenture, and issued in exchange therefor
or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 of the Trust Indenture.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
of the Trust Indenture.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" under the Trust Indenture, in
the Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" under the Trust Indenture, in
the Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" under the Trust Indenture, in
the Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series C."
"Special Purchase Price" shall mean the amount denominated as such
in Exhibit B to the Lease.
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Stipulated Loss Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, shall mean, but subject
always to the provisions of Section 3(d)(v) of the Lease, the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit C to the Lease opposite the Stipulated Loss Value Date with respect to
which the amount is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) of the Lease and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after the last day
of the Basic Term shall be the amount determined as provided in Section 19(a) of
the Lease.
"Sublease" means any sublease permitted by the terms of Section
7(b)(x) of the Lease.
"Sublessee" means any Person for so long, but only so long, as such
Person is in possession of the Airframe and/or any Engine pursuant to the terms
of a Sublease which is then in effect pursuant to Section 7(b)(x) of the Lease.
"Subordination Agent" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor thereto.
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"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent) which Lessee
assumes or agrees to pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to clause (b) of the
third paragraph of Section 2.02 of the Trust Indenture, (c) Lessor's pro rata
share of all compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust Agreements, and (d)
Lessor's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata share" means as of
any time a fraction, the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in the Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 H], to be dated as of the Delivery Date, between the Owner Participant
and Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes (including,
without limitation, income, gross receipts, sales, rental, use, turnover, value
added, property (tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to tax and
interest thereon (each, individually a "Tax").
"Term" means the Basic Term and, if actually entered into, any
Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, means, but subject always
to the provisions of Section 3(d)(v) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D to the Lease opposite the Termination Date with respect to which the
amount is determined (as such Exhibit D may be adjusted from time to time as
provided in Section 3(d) of the Lease and in Section 7 of the Tax Indemnity
Agreement).
"Transaction Expenses" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee in connection with
the transactions contemplated by the
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Participation Agreement, the other Operative Documents, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
including, without limitation:
(1) the reasonable and actual fees, expenses and disbursements
of (A) ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for the Underwriters,
and (D) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual disbursements
of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements of
the Indenture Trustee under the Trust Indenture;
(4) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee and the Subordination Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of special
counsel to the Owner Participant, such fees not to exceed the amount previously
agreed to by the Owner Participant and Lessee;
(8) the fees, expenses and disbursements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, special counsel for Lessee;
(9) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code statements in the United States;
(10) the reasonable fees, expenses and disbursements of
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the Liquidity
Provider;
(11) the reasonable fees, expenses and disbursements of
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, special counsel to the Manufacturer; and
(12) the equity placement fee and reasonable disbursements of
▇▇▇▇▇▇▇ and ▇▇▇▇▇ Financial Corporation.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
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"Transfer Date" has the meaning specified in Section 1(b) of the
Participation Agreement.
"Triggering Event" has the meaning specified in the Intercreditor
Agreement.
"Trust Agreement" means that certain Trust Agreement [NW 1997 H],
dated as of the Certificate Closing Date, between the Initial Owner Participant
and First Security Bank, National Association, in its individual capacity, as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"Trust Agreement and Indenture Supplement" or "Trust Supplement"
shall mean a supplement to the Trust Agreement and to the Trust Indenture, in
substantially the form of Exhibit A to the Trust Indenture, which shall
particularly describe the Aircraft, and any Replacement Airframe and Replacement
Engine included in the property of the Owner Trustee covered by the Trust
Agreement. The initial Trust Agreement and Indenture Supplement shall be dated
the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the Trust Indenture and Security Agreement [NW 1997 H],
dated as of the Certificate Closing Date, between Lessor and the Indenture
Trustee, as originally executed or as modified, amended or supplemented in
accordance with its terms, including supplementing by the Trust Agreement and
Indenture Supplement pursuant thereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture, excluding Excluded Payments.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor and the underwriters
named therein.
"United States" or "U.S." means the United States of America.
"U.S. Air Carrier" means any Certificated Air Carrier as to which
there is in force an air carrier operating certificate issued pursuant to Part
121 of the regulations under the Federal Aviation Act, or which may operate as
an air carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby the Lessee (or any
Sublessee) agrees to furnish the Airframe and Engines or engines installed
thereon to a third party pursuant to which such Airframe and Engines or engines
(i) shall be operated solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that
-23-
would be required under the Federal Aviation Act or, if the Aircraft is not
registered in the United States, all certificates and licenses required by the
laws of the jurisdiction of registry, for the performance by such employees of
similar functions within the United States of America or such other jurisdiction
of registry (it is understood that cabin attendants need not be regular
employees of Lessee (or any Sublessee)) and (ii) shall be maintained by Lessee
(or any Sublessee) in accordance with its normal maintenance practices.
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