CONFORMED COPY
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EXHIBIT 10.3
________________________________________________________________________________
TRUST INDENTURE AND SECURITY AGREEMENT [N583ML]
Dated as of August 10, 1999
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
Owner Trustee
and
ALLFIRST BANK,
Indenture Trustee
_________________________________
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N583ML
AND MANUFACTURER'S SERIAL NUMBER 7327
_________________________________
________________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS........................................................................................ 5
SECTION 1.01. Definitions.................................................................. 5
ARTICLE II
THE EQUIPMENT NOTES................................................................................ 6
SECTION 2.01. Form of Equipment Notes...................................................... 6
SECTION 2.02. Terms of Equipment Notes..................................................... 6
SECTION 2.03. Payments from Indenture Estate Only.......................................... 7
SECTION 2.04. Method of Payment............................................................ 8
SECTION 2.05. Application of Payments...................................................... 8
SECTION 2.06. Termination of Interest in Indenture Estate.................................. 9
SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes....................... 9
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes......................... 10
SECTION 2.09. Payment of Expenses on Transfer.............................................. 10
SECTION 2.10. Prepayment................................................................... 11
SECTION 2.11. Provisions Relating to Prepayment............................................ 12
SECTION 2.12. Purchase Upon an Event of Default............................................ 12
SECTION 2.13. Equipment Notes in Respect of Replacement Aircraft........................... 13
SECTION 2.14. Increased Costs.............................................................. 14
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE................................................................ 16
SECTION 3.01. Basic Rent Distribution...................................................... 16
SECTION 3.02. Lease Termination, Event of Loss and Replacement............................. 17
SECTION 3.03. Payment After Indenture Event of Default, etc................................ 18
SECTION 3.04. Certain Payments............................................................. 19
SECTION 3.05. Other Payments............................................................... 20
SECTION 3.06. Payments to Owner Trustee.................................................... 20
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.............................. 20
SECTION 3.08. Taxes; Withholding........................................................... 21
ARTICLE IV
COVENANTS; EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE...................................................................... 22
SECTION 4.01. Covenants of the Trust Company and the Owner Trustee......................... 22
SECTION 4.02. Indenture Event of Default................................................... 23
SECTION 4.03. Certain Cure Rights.......................................................... 25
SECTION 4.04. Remedies..................................................................... 27
SECTION 4.05. Return of Aircraft, etc...................................................... 29
SECTION 4.06. Remedies Cumulative.......................................................... 30
SECTION 4.07. Discontinuance of Proceedings................................................ 30
SECTION 4.08. Waiver of Past Defaults...................................................... 30
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE.................................................................... 31
SECTION 5.01. Notices...................................................................... 31
SECTION 5.02. Action Upon Instructions..................................................... 32
SECTION 5.03. Indemnification.............................................................. 32
SECTION 5.04. No Duties Except as Specified in Indenture or Instructions................... 33
SECTION 5.05. No Action Except Under Lease, Participation
Agreement, Indenture or Instructions...................................... 33
SECTION 5.06. Replacement Airframes and Replacement Engines................................ 33
SECTION 5.07. Indenture Supplements for Replacements....................................... 36
SECTION 5.08. Effect of Replacement........................................................ 36
SECTION 5.09. Certain Rights of Owner Trustee and Owner Participant........................ 36
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE........................................................ 38
SECTION 6.01. Acceptance of Trusts and Duties.............................................. 38
SECTION 6.02. Absence of Duties............................................................ 39
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents................. 39
SECTION 6.04. No Segregation of Monies; No Interest........................................ 40
SECTION 6.05. Reliance; Agents; Advice of Counsel.......................................... 40
SECTION 6.06. Capacity in Which Acting..................................................... 40
SECTION 6.07. Compensation................................................................. 40
SECTION 6.08. May Become Noteholder........................................................ 41
SECTION 6.09. Further Assurances; Financing Statements..................................... 41
SECTION 6.10. Assumption of Equipment Notes upon Purchase of Aircraft...................... 41
ARTICLE VII
SUCCESSOR TRUSTEES; SEPARATE TRUSTEES.............................................................. 41
SECTION 7.01. Notice of Successor Owner Trustee............................................ 41
SECTION 7.02. Resignation of Indenture Trustee; Appointment of Successor................... 42
SECTION 7.03. Appointment of Separate Trustees............................................. 43
ARTICLE VIII
SUPPLEMENTS AND AMENDMENTS TO
THIS INDENTURE AND OTHER DOCUMENTS................................................................. 45
SECTION 8.01. Instructions of Majority; Limitations........................................ 45
SECTION 8.02. Trustees Protected........................................................... 46
SECTION 8.03. Documents Mailed to Noteholders.............................................. 46
SECTION 8.04. No Request Necessary for Lease Supplement or Indenture
Supplement................................................................... 46
ARTICLE IX
MISCELLANEOUS...................................................................................... 46
SECTION 9.01. Termination of Indenture..................................................... 46
SECTION 9.02. No Legal Title to Indenture Estate in Noteholders............................ 47
SECTION 9.03. Sale of Aircraft by Indenture Trustee is Binding............................. 47
SECTION 9.04. Indenture for Benefit of Owner Trustee, Indenture Trustee,
Owner Participant and Noteholders............................................ 47
SECTION 9.05. No Action Contrary to Lessee's Rights under the Lease........................ 47
SECTION 9.06. Notices...................................................................... 47
SECTION 9.07. Severability................................................................. 47
SECTION 9.08. No Oral Modifications or Continuing Waivers.................................. 48
SECTION 9.09. Successors and Assigns....................................................... 48
SECTION 9.10. Headings..................................................................... 48
SECTION 9.11. Governing Law................................................................ 48
SECTION 9.12. Counterpart Form............................................................. 48
SECTION 9.13. Waiver of Jury Trial......................................................... 48
SECTION 9.14. Submission to Jurisdiction................................................... 48
SECTION 9.15. Payment in Dollars........................................................... 49
APPENDIX A DEFINITIONS
EXHIBIT A INDENTURE SUPPLEMENT
EXHIBIT B FORM OF EQUIPMENT NOTE
TRUST INDENTURE AND SECURITY AGREEMENT [N583ML]
TRUST INDENTURE AND SECURITY AGREEMENT [N583ML] dated as of August 10,
1999 between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as otherwise specifically
set forth herein (when acting in such individual capacity, "Trust Company"), but
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solely as owner trustee (the "Owner Trustee") under the Trust Agreement, as
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defined herein, and ALLFIRST BANK, a Maryland state-chartered commercial bank
(when acting in its individual capacity, "Allfirst"), as Indenture Trustee
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hereunder (the "Indenture Trustee").
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WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Trust Company have entered into
the Trust Agreement whereby, among other things, the Trust Company has declared
a certain trust for the use and benefit of the Owner Participant, subject,
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however, to the Lien of this Indenture, and the Owner Trustee is authorized and
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directed to execute and deliver this Indenture;
WHEREAS, the Owner Trustee desires by this Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee to the Loan
Participant of an Equipment Note evidencing participation by the Loan
Participant in the payment of Lessor's Cost for the Aircraft as provided in the
Participation Agreement, and (ii) to provide for the assignment, mortgage and
pledge by the Owner Trustee to the Indenture Trustee, as part of the Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's right,
title and interest in and to the Aircraft and the Indenture Documents and the
payments and other amounts received thereunder or in respect thereof in
accordance with the terms hereof, as security for, among other things, the Owner
Trustee's and Lessee's obligations to the Noteholders, and for the benefit and
security of the Noteholders;
WHEREAS, all things have been done to make the Equipment Note to be
delivered to the Loan Participant on the Delivery Date, when executed by the
Owner Trustee and authenticated, issued and delivered hereunder, the valid
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, for the uses and purposes
herein set forth and in accordance with its terms, have been done and performed
and have happened.
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- - GRANTING CLAUSE - -
NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment when due of the principal of and
Make-Whole Amount (if any) and interest on, and all other amounts due with
respect to, all Equipment Notes from time to time outstanding hereunder and the
performance and observance by the Owner Trustee of all the agreements, covenants
and provisions for the benefit of the Noteholders herein and in the
Participation Agreement and the Equipment Notes contained, and the prompt
payment of any and all amounts from time to time owing hereunder and under the
Participation Agreement and the other Operative Agreements by the Owner Trustee,
the Owner Participant or the Lessee to the Noteholders (collectively, the
"Secured Obligations"), and for the uses and purposes and subject to the terms
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and provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes by the holders
thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee
at or before the delivery hereof, the receipt whereof is hereby acknowledged,
the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee and
its successors and assigns, for the security and benefit of the Noteholders, as
aforesaid, a first priority security interest in and first mortgage lien upon,
all right, title and interest of the Owner Trustee in, to and under the
following described property, rights and privileges, other than Excluded
Payments and subject to the rights of the Owner Trustee and the Owner
Participant set forth herein (which collectively, excluding Excluded Payments
but including all property hereafter specifically subjected to the Lien of this
Indenture by an Indenture Supplement or any other mortgage supplemental hereto
shall constitute the "Indenture Estate"), to wit:
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(1) all estate, right, title and interest of the Owner Trustee in
the Aircraft (including the Airframe and the Engines) and all
replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire title as provided herein and
in the Lease, all as more particularly described in the Indenture
Supplement executed and delivered with respect to the Aircraft or any
such replacements or substitutions therefor, as provided in this
Indenture, and all records, logs, manuals and data and inspection,
modification and overhaul records and other documents at any time
maintained with respect to the foregoing property;
(2) all estate, right, title and interest of the Owner Trustee
in, to and under the Lease and all Rent thereunder, including, without
limitation, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition and other payments of any kind thereunder and including
all rights of the Owner Trustee to execute any election or option or
to give any notice, consent, waiver, or approval under or in respect
of the Lease or to accept any surrender of the Aircraft or any part
thereof, as well as any rights, powers or remedies on the part of the
Owner Trustee, whether arising under the Lease or by statute or at law
or in equity, or otherwise, arising out of any Event
2
of Default and to do any and all other things whatsoever which the
Owner Trustee is or may be entitled to do under the Lease;
(3) all estate, right, title and interest of the Owner Trustee
in, to and under the Participation Agreement, the Warranty ▇▇▇▇ of
Sale, the FAA ▇▇▇▇ of Sale, the Purchase Agreement (to the extent
assigned by the Purchase Agreement Assignment), the Purchase Agreement
Assignment, the PAA Consent, the Engine Warranty Assignment, the
Warranties (as defined in the Engine Warranty Assignment), the Engine
Manufacturer's Consent and any Sublease (including, without
limitation, all rights to amounts paid or payable to the Owner Trustee
thereunder and all rights to enforce such payments) (collectively, and
together with the Lease and the Equipment Notes, the "Indenture
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Documents") and including all rights of the Owner Trustee to execute
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any election or option or to give any notice, consent, waiver or
approval under or in respect thereof and to do any and all other
things which the Owner Trustee is or may be entitled to do thereunder;
(4) all tolls, rents, issues, profits, revenues and other income
of the property subjected or required to be subjected to the Lien of
this Indenture including all payments or proceeds payable to the Owner
Trustee after termination of the Lease with respect to the Aircraft as
the result of the sale, lease or other disposition thereof, and all
estate, right, title and interest of every nature whatsoever of the
Owner Trustee in and to the same and every part thereof;
(5) all insurance and requisition proceeds and all other payments
of any kind with respect to the Aircraft, including but not limited to
the insurance required under Section 9 of the Lease;
(6) all monies and securities deposited or required to be
deposited with the Owner Trustee or the Indenture Trustee pursuant to
any term of this Indenture or the Lease or required to be held by the
Indenture Trustee hereunder; and
(7) all proceeds of the foregoing.
BUT EXCLUDING, in all events from each of the foregoing clauses (1)
through (7), inclusive, and the Indenture Estate, all Excluded Payments, and
SUBJECT TO, the rights of the Owner Trustee and the Owner Participant under
Section 5.09.
The Owner Trustee is concurrently with the delivery hereof delivering to the
Indenture Trustee an executed chattel paper original counterpart of each of the
Lease and the Lease Supplement covering the Aircraft, together with executed
copies of the Trust Agreement and each of the other Indenture Documents (other
than the Participation Agreement and the FAA ▇▇▇▇ of Sale). All property
referred to in this Granting Clause, whenever acquired by the Owner Trustee,
shall secure the Secured Obligations at any time outstanding. Any and all
properties referred to in this Granting Clause which
3
are hereafter acquired by the Owner Trustee, shall, without further conveyance,
assignment or act by the Owner Trustee or the Indenture Trustee thereby become
and be subject to the security interest hereby granted as fully and completely
as though specifically described herein.
- - HABENDUM CLAUSE - -
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the Noteholders, and for the uses and purposes and subject to the
terms and provisions set forth in this Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under the Indenture
Documents to perform all of the obligations assumed by it thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Noteholders shall have no obligation or liability
under any thereof by reason of or arising out of the assignment hereunder, nor
shall the Indenture Trustee or the Noteholders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, except as therein or herein
expressly provided, to make any payment, or to make any inquiry as to the nature
or sufficiency of any payment received by it, or present or file any claim, or
take any action to collect or enforce the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, coupled with an
interest and with full power (in the name of the Owner Trustee or otherwise) to
ask, require, demand, receive, compound and give acquittance for any and all
monies and claims for monies (in each case including insurance and requisition
proceeds but in all cases excluding Excluded Payments) due and to become due
under or arising out of the Indenture Documents and all other property which now
or hereafter constitutes part of the Indenture Estate, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or to
take any action or to institute any proceedings which the Indenture Trustee may
deem to be necessary or advisable in the premises. Without limiting the
provisions of the foregoing, during the continuance of any Indenture Event of
Default but subject to the terms hereof and of the other Operative Agreements,
the Indenture Trustee shall have the right under such power of attorney to ▇▇▇
for, compound and give acquittance for, to accept any offer of any purchaser to
purchase the Airframe and Engines as provided herein or in the Lease and upon
such purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate ▇▇▇▇ of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may reasonably deem necessary or appropriate to protect
and preserve the right, title and interest of the Indenture Trustee in and to
such Rent and other sums and the security intended to be afforded hereby;
provided no action of the Indenture Trustee pursuant to this paragraph shall
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increase the obligations or liabilities
4
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Indenture and the other Operative Agreements.
Under the Lease the Lessee is directed to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments), directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application as provided in this Indenture.
The Owner Trustee agrees that promptly on receipt thereof, it will transfer to
the Indenture Trustee any and all monies from time to time received by it
constituting part of the Indenture Estate, for distribution by the Indenture
Trustee pursuant to this Indenture.
The Owner Trustee does hereby warrant and represent that (except as
permitted herein) it has not assigned or pledged any of its right, title, and
interest hereby assigned to anyone other than the Indenture Trustee.
The Owner Trustee does hereby ratify and confirm the Indenture
Documents and does hereby agree that (except as permitted herein) it will not
take or omit to take any action, the taking or omission of which would result in
an alteration or impairment of any of the Indenture Documents or of any of the
rights created by any thereof or the assignment hereunder.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver any and all such further instruments and documents
as the Indenture Trustee may reasonably request in obtaining the full benefits
of this assignment and of the rights and powers herein granted.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there are hereby expressly excluded from the foregoing grant,
bargain, sale, assignment, transfer, conveyance, mortgage, pledge and security
interest all Excluded Payments. Further, nothing in the Granting Clause or any
of the preceding paragraphs shall impair in any respect the rights of the Owner
Trustee or the Owner Participant under Section 5.09.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. For all purposes of this Indenture, terms
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defined in the heading and recitals of this Indenture are used as so defined and
capitalized terms used but not defined in this Indenture are used as define in
Appendix A hereto (such definitions to be equally applicable to both the
singular and plural forms of the terms defined). Any agreement referred to below
shall mean such agreement as amended, supplemented and modified from time to
time in accordance with the applicable provisions thereof and of the other
Operative Agreements. Any
5
Person referenced to herein shall mean such Person and its successors and
permitted assigns. Unless otherwise specified, Section and Article references
are to Sections and Articles of this Indenture.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes and the
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Indenture Trustee's certificate of authentication to appear on the Equipment
Notes shall each be substantially in the form set forth on Exhibit B.
SECTION 2.02. Terms of Equipment Notes. (a) On the Delivery Date the
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Owner Trustee shall issue an Equipment Note to the Loan Participant in an
aggregate original principal amount in Dollars equal to the percentage of
Lessor's Cost set forth opposite the Loan Participant's name on Schedule I to
the Participation Agreement. Each Equipment Note shall bear interest on the
unpaid principal amount thereof from time to time outstanding from and including
the date thereof until such principal amount is paid in full at the Applicable
Rate, payable in arrears on each Payment Date and on the date such Equipment
Note is paid in full. Interest hereunder and under the Equipment Notes shall be
calculated on the basis of a year of 360 days consisting of twelve 30-day
months; provided that interest on past due amounts shall be calculated on the
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basis of a year of 360 days and actual days elapsed.
(b) The principal of the Equipment Notes shall be due and payable on
each Payment Date in the number of installments as noted at Annex A to each
Equipment Note.
(c) Each Equipment Note shall bear interest at the Past Due Rate on
any principal thereof and, to the extent permitted by Applicable Law, interest
and other amounts due thereunder and hereunder, not paid when due (whether at
stated maturity, by acceleration or otherwise), for any period during which the
same shall be overdue, payable by the Owner Trustee on demand from the
respective Noteholder given through the Indenture Trustee. Interest under this
clause (c) shall be calculated on the basis of a year of 360 days and the actual
number of days elapsed.
(d) The Equipment Notes shall be executed on behalf of the Owner
Trustee by one of its authorized officers. Equipment Notes bearing the
signatures of individuals who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Equipment Notes or did not hold such offices at the respective
dates of such Equipment Notes. No Equipment Notes shall be issued hereunder
except those provided for in Section 2.02(a) and any Equipment Notes issued in
exchange or replacement therefor pursuant to the terms of this Indenture. The
Equipment Note issued under this Section 2.02 shall be dated the Delivery Date.
No Equipment Note shall be secured by or entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual
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signature of one of its authorized officers and such certificate upon any
Equipment Note shall be conclusive evidence, and the only evidence, that such
Equipment Note has been duly authenticated and delivered hereunder.
The principal amount of the Equipment Note issued to the Loan Participant
on the Delivery Date shall not exceed the Loan Participant's Commitment.
SECTION 2.03. Payments from Indenture Estate Only. Except as otherwise
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expressly provided in the next succeeding sentence of this Section 2.03, all
payments to be made by the Owner Trustee under this Indenture shall be made only
from the income and the proceeds from the Indenture Estate and only to the
extent that the Owner Trustee shall have sufficient income or proceeds from the
Indenture Estate to enable the Owner Trustee to make payments in accordance with
the terms hereof. Each Noteholder, by its acceptance of an Equipment Note, and
the Indenture Trustee, each agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
it as above provided and that none of the Owner Participant, the Trust Company
or the Indenture Trustee is personally liable to it for any amounts payable or
any liability under this Indenture or such Equipment Note or for any amounts
payable or liability under any Equipment Note or this Indenture, except, in the
case of the Trust Company and the Indenture Trustee, as expressly provided
herein or in the Participation Agreement; provided, however, that nothing
contained in this Section 2.03 shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or any other
Operative Agreement or such other agreements of rights and remedies against the
Indenture Estate or any such other Person as to their respective obligations to
the Noteholders thereunder.
The Indenture Trustee hereby waives to the fullest extent permitted by law
the benefit of the provisions of Section 1111(b) of Title 11 of the Bankruptcy
Code with respect to recourse against the Owner Trustee (in its individual
capacity) and the Owner Participant on account of any amount payable as
principal of, Make Whole Amount, if any, and interest on the Equipment Notes,
provided that such waiver shall not preclude the Indenture Trustee from electing
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application of Section 1111(b) (2) of Title 11 of the Bankruptcy Code. The Loan
Participant, each Noteholder and the Indenture Trustee agree that, if (i) the
Trust Estate or the trust created by the Trust Agreement becomes a debtor
subject to the reorganization provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statutes, (ii) pursuant to such
reorganization provision, the Owner Participant is held to have recourse
liability to the Indenture Trustee or any Noteholder directly or indirectly on
account of any amount payable as principal, interest or premium on the Equipment
Notes, and (iii) any Noteholder or the Indenture Trustee actually receives any
Recourse Amount which reflects any payment by the Owner Participant on account
of (ii) above, then such Noteholder or the Indenture Trustee, as the case may
be, shall promptly refund to the Owner Participant such Recourse Amount. For
purposes of this Section 2.03, "Recourse Amount" means the amount by which the
portion of such payment by the Owner Participant on account of clause (ii) above
received by such Noteholder or Indenture Trustee exceeds the amount which would
have been received by such Noteholder or the Indenture Trustee if the Owner
Participant had not become subject to the recourse liability referred to in (ii)
above. Nothing contained in this Section shall
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prevent any Noteholder or the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
the Participation Agreement or any other Operative Agreement to the extent
therein provided, for which the Owner Participant has expressly agreed by the
terms of the Participation Agreement to accept individual responsibility.
SECTION 2.04. Method of Payment. Principal and interest and other
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amounts due hereunder or under the Equipment Notes or in respect hereof or
thereof shall be payable in Dollars in immediately available funds prior to
12:00 noon, New York time, on the due date thereof, to the Indenture Trustee at
its Corporate Trust Department located at the address specified in Section 2.07
and the Indenture Trustee shall, subject to the terms and conditions hereof,
remit all such amounts so received by it to the Noteholders at such account or
accounts at such financial institution or institutions as the Noteholders shall
have designated to the Indenture Trustee in writing (which in the case of the
initial Noteholder shall be the account designated on Schedule II to the
Participation Agreement under the heading "Loan Participant"), in immediately
available funds for distribution to the relevant Noteholders, such payment to be
made, in the case of any such designated account in New York, New York, prior to
2:00 p.m., New York time, on the due date thereof. In the event the Indenture
Trustee, through negligence or willful misconduct, shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt of
funds at the place and prior to the time specified above, the Indenture Trustee,
in its individual capacity and not as trustee, agrees to compensate the
Noteholders for loss of use of funds in a commercially reasonable manner, and
the Owner Trustee shall have no liability for and the Indenture Estate shall not
secure any such loss or any overdue interest on the Equipment Notes in
connection with any such failure of the Indenture Trustee to timely distribute
funds. All such payments by the Owner Trustee and the Indenture Trustee shall be
made without presentment or surrender of any Equipment Note and free and clear
of and without reduction for account of all wire and other like charges. Prior
to the due presentment for registration of transfer of any Equipment Note, the
Owner Trustee and the Indenture Trustee may deem and treat the Person in whose
name any Equipment Note is registered on the Register as the absolute owner of
such Equipment Note for the purpose of receiving payment of all amounts payable
with respect to such Equipment Note and for all other purposes whether or not
such Equipment Note shall be overdue, and neither the Owner Trustee nor the
Indenture Trustee shall be affected by any notice to the contrary. If any sum
payable under the Equipment Notes or under this Indenture falls due on a day
which is not a Business Day, then such sum shall be payable on the next
succeeding Business Day, without additional interest as a result of such
extension.
SECTION 2.05. Application of Payments. Each payment of principal and
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interest or other amounts due in respect of each Equipment Note shall, except as
otherwise expressly provided herein, be applied, first, to the payment of any
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amount (other than the principal of or Make-Whole Amount or interest on such
Equipment Note) due in respect of such Equipment Note, second, to the payment of
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Make-Whole Amount, if any, and interest on such Equipment Note (as well as any
interest on overdue principal and, to the extent permitted by law, interest and
other amounts payable thereunder) due thereunder, third, to the payment of the
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principal of such Equipment Note then due and fourth, the balance, if any,
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remaining thereafter, to the payment of the principal of such Equipment Note
remaining unpaid (provided that such Equipment Note shall not be subject to
8
prepayment or purchase without the consent of the affected Noteholder except as
permitted by Sections 2.10, 2.11, 2.12 and 2.14). The amounts paid pursuant to
clause fourth above shall be applied to the installments of principal of such
Equipment Note in inverse order of maturity.
SECTION 2.06. Termination of Interest in Indenture Estate. A
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Noteholder shall not, as such, have any further interest in, or other right with
respect to, the Indenture Estate when and if the principal amount of and Make-
Whole Amount, if any, and interest on and other amounts due under all Equipment
Notes held by such Noteholder and all other sums due to such Noteholder
hereunder and under the other Operative Agreements shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes.
------------------------------------------------------
The Indenture Trustee agrees with the Owner Trustee that the Indenture Trustee
shall keep a register (herein sometimes referred to as the "Register") in which
--------
provisions shall be made for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. The Register shall be kept at the
Indenture Trustee's Corporate Trust Department located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Mail Code 101-591, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at the office of any
successor indenture trustee, and the Indenture Trustee is hereby appointed the
"Registrar" for the purpose of registering Equipment Notes and transfers of
Equipment Notes as herein provided. Upon surrender for registration of transfer
of any Equipment Note at the Indenture Trustee's Corporate Trust Department, the
Owner Trustee shall execute, and the Indenture Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Equipment Notes of a like aggregate principal amount. At the option of the
Noteholder, its Equipment Notes may be exchanged for other Equipment Notes of
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Equipment Notes to be exchanged at the Indenture Trustee's
Corporate Trust Department. Each new Equipment Note issued upon transfer or
exchange shall be in a principal amount of at least $1,000,000 (except as may be
necessary to evidence the entire outstanding principal amount of an Equipment
Note) and dated the Delivery Date. Whenever any Equipment Notes are so
surrendered for exchange, the Owner Trustee shall execute, and the Indenture
Trustee shall authenticate and deliver, the Equipment Notes which the Noteholder
making the exchange is entitled to receive. All Equipment Notes issued upon any
registration of transfer or exchange of Equipment Notes shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Indenture, as the
Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer or
exchange, shall (if so required by the Owner Trustee or the Indenture Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Indenture Trustee duly executed by the
Noteholder thereof or his attorney duly authorized in writing, and the Indenture
Trustee may require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act. The Indenture Trustee shall make a notation on
each new Equipment Note or Equipment Notes of the amount of all payments of
principal previously made on the old Equipment Note or Equipment Notes with
respect to which such new Equipment Note is issued and the date to which
interest accrued on such old Equipment Note or Equipment Notes has been paid.
The Indenture Trustee shall not be required to register the transfer or exchange
of any surrendered
9
Equipment Notes as above provided during the ten (10) Business Day period
preceding the due date of any payment on such Equipment Notes. Any Noteholder
may transfer any or all of its Equipment Notes to any Person other than the
Lessee or its Affiliates. The Owner Trustee and the Indenture Trustee shall
treat the Person in whose name each Equipment Note is registered on the Register
as the Noteholder with respect thereto for all purposes hereof until due
presentment for registration of transfer as provided in this Section 2.07. The
Indenture Trustee shall give the Lessee and each Noteholder prompt notice of
such transfer of an Equipment Note under this Section 2.07. Each holder of an
Equipment Note, by its acceptance thereof, agrees that any transfer of any
Equipment Note acquired by it hereunder shall not be effected unless the
transferee shall have delivered to the Indenture Trustee, the Lessee, the Owner
Participant and the Owner Trustee (i) a representation as to the matters
specified in Section 5.08 of the Participation Agreement and, notwithstanding
the above, such transferee by its acceptance of an Equipment Note shall be
deemed to have made such a representation and (ii) an agreement to be bound by
and comply with the provisions of the Participation Agreement and this Indenture
binding on a Loan Participant and, notwithstanding the above (but without
derogation to the requirements for delivery of such agreement), such transferee
by its acceptance of an Equipment Note shall be deemed to have made such
representations and such agreement.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If
----------------------------------------------------
any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner
Trustee shall, upon the written request of the affected Noteholder, execute, and
the Indenture Trustee shall authenticate and deliver in replacement thereof, a
new Equipment Note in the same principal amount, dated the date of such
Equipment Note and designated as issued under this Indenture. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee. If the Equipment Note being replaced has
been destroyed, lost or stolen, the affected Noteholder shall furnish to the
Owner Trustee and the Indenture Trustee such security or indemnity as may be
reasonably required by them to hold the Owner Trustee and the Indenture Trustee
harmless and evidence satisfactory to the Owner Trustee and the Indenture
Trustee of the destruction, loss or theft of such Equipment Note and of the
ownership thereof; provided, however, that if the affected Noteholder is an
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original party to the Participation Agreement or an Affiliate thereof, the
written notice of such destruction, loss or theft and such ownership and the
written undertaking of such Noteholder delivered to the Owner Trustee and the
Indenture Trustee to hold harmless the Owner Trustee and the Indenture Trustee
in respect of the execution, authentication and delivery of such new Equipment
Note shall be sufficient evidence, security and indemnity.
SECTION 2.09. Payment of Expenses on Transfer. Upon the issuance of a
-------------------------------
new Equipment Note or new Equipment Notes pursuant to Section 2.07 or 2.08, the
Owner Trustee and/or the Indenture Trustee may require from the party requesting
such new Equipment Note or Equipment Notes payment of a sum sufficient to
reimburse the Owner Trustee and/or the Indenture Trustee for, or to provide
funds for, the payment of any tax or other governmental charge in connection
therewith or any charges and expenses connected with such tax or other
governmental charge paid or payable by the Owner Trustee or the Indenture
Trustee.
10
SECTION 2.10. Prepayment. (a) The Owner Trustee may, in accordance
----------
with Section 2.10(b), if requested to do so by the Lessee and upon no less than
30 days' prior irrevocable notice to the Indenture Trustee and the original
Noteholder (so long as it holds an Equipment Note), on any date on or after the
fifth anniversary of the Delivery Date prepay in whole but not in part the
Equipment Notes then outstanding (except in the case of a prepayment which
occurs after a Noteholder has requested the payment of (x) any Increased Costs
pursuant to Section 2.14(a) or (y) any amounts pursuant to Article 6 of the
Participation Agreement in respect of withholding Taxes, in which case such
prepayment, if elected to be made by the Owner Trustee, may be made at any time)
at the principal amount thereof, together with accrued interest thereon to the
date of prepayment plus the Make-Whole Amount (if any) and all other amounts due
to the holders of the Equipment Notes hereunder, thereunder and under the other
Operative Agreements.
(b) The Equipment Notes shall be prepaid in full but not in part,
together with accrued interest thereon to the date of prepayment and all other
amounts due thereunder and hereunder and under the other Operative Agreements to
the Noteholders:
(i) Upon the occurrence of an Event of Loss with respect to the
Airframe (unless pursuant to Section 8(a)(i) of the Lease and Section 5.06
a Replacement Airframe, together with the same number of Replacement
Engines as the Engines, if any, subject to such Event of Loss, shall have
been substituted for the Airframe and/or the Engines subject to such Event
of Loss), on the earlier of the date of the Lessee's payment with respect
to such Event of Loss in Section 8(a)(ii) of the Lease and the last day
permitted for such payment under said Section 8(a)(ii);
(ii) Upon the Lessee's election to terminate the Lease with respect to
the Aircraft as provided in Section 14(a) of the Lease, on the Termination
Date of the Lease as provided in said Section 14(a);
(ii) Upon the Lessee's election to purchase the Aircraft on the EBO
Date as provided in Section 13(b) of the Lease, on the date of such
purchase as provided in said Section 13(b) of the Lease (unless Lessee has
assumed the Owner Trustee's obligations pursuant to and in accordance with
Section 5.10 of the Participation Agreement); and
(iv) Upon the Lessee's election to refinance the Equipment Notes as
provided in Section 13.01 of the Participation Agreement, and upon no less
than 30 days' prior notice to the Indenture Trustee, on the closing date of
such refinancing as provided in said Section 13.01 of the Participation
Agreement.
The Owner Trustee will give notice of prepayment under this Section 2.10(b) to
Indenture Trustee and the original Noteholder (so long as it holds an Equipment
Note) promptly after receipt of the Lessee's notice of payment under Section
8(a)(ii), 13(b) or 14(a) of the Lease, or refinancing under Section 13.01 of the
Participation Agreement, as the case may be. Any prepayment of the Equipment
11
Notes pursuant to clause (ii), clause (iii) or clause (iv) of this Section
2.10(b) (but not clause (i)) shall be accompanied by the Make-Whole Amount (if
any) for each Noteholder.
SECTION 2.11. Provisions Relating to Prepayment. (a) The Owner Trustee
---------------------------------
shall have no right to prepay the principal amount of the Equipment Notes, in
whole or in part, or purchase the Equipment Notes except as permitted by
Sections 2.10, 2.11, 2.12 and 2.14. Any such prepayment shall, except as
otherwise expressly provided in this Indenture, Section 13.01 of the
Participation Agreement or Section 13(b) of the Lease, as the case may be, be
made by the Owner Trustee only on a date coincident with a Termination Date and
upon notice to the Indenture Trustee, the Noteholders and the Lessee provided
for in Section 2.10 or in Section 8(a)(ii) or 14(a) of the Lease, as the case
may be. Notice of prepayment having been given as aforesaid, the principal
amount of the Equipment Notes so to be prepaid, plus accrued interest thereon to
the date of prepayment, together with the Make-Whole Amount, if any, if required
to be paid as herein provided, shall become due and payable on the prepayment
date; provided, however, with respect to any prepayment under Section 2.10(b),
-------- -------
if any applicable notice of termination is timely revoked (or if the Lease does
not in fact so terminate) pursuant to Section 14 of the Lease or if all amounts
due and payable pursuant to Section 8(a)(ii), 13(b) or 14(a) of the Lease, or
Section 13.01 of the Participation Agreement, as the case may be, are not paid
or the refinancing is not consummated pursuant to Section 13.01 of the
Participation Agreement, or if the Lessee assumes the Owner Trustee's
obligations under the Equipment Notes and this Indenture pursuant to and in
accordance with Section 5.10 of the Participation Agreement, then the principal
amount of the Equipment Notes shall not be deemed to have been due and no Make-
Whole Amount, if any, shall be payable as a result thereof.
(b) On the date fixed for prepayment under Section 2.10, immediately
available funds in Dollars shall be deposited by the Owner Trustee in the
account of the Indenture Trustee at the place and by the time and otherwise in
the manner provided in Section 2.04, in an amount equal to the principal amount
of Equipment Notes to be prepaid together with accrued and unpaid interest
thereon to the date fixed for such prepayment, all Make-Whole Amount, if any,
and all other amounts due to the holders of the Equipment Notes hereunder,
thereunder and under the other Operative Agreements.
SECTION 2.12. Purchase Upon an Event of Default. At any time while (x)
---------------------------------
an Event of Default (without regard to any waiver thereof by the Indenture
Trustee) has occurred and has been continuing for a period of 190 days during
which the Noteholders or the Indenture Trustee shall not have been stayed or
otherwise precluded by operation of law from taking action to accelerate the
Equipment Notes or to exercise remedies hereunder or under the Lease and shall
not, during such 190 day period, have taken any such action or exercised any
such remedy, or (y) the Equipment Notes shall have become due and payable as
provided in Section 4.04(b) or 4.04(c) or (z) an Event of Default (without
regard to any waiver thereof by the Indenture Trustee) has occurred and is
continuing, the Owner Participant may, at any time within 120 days after such
190-day period in the case of clause (x) above, at any time after the Equipment
Notes have become due in the case of clause (y) above and at any time during
which such Event of Default shall have occurred and been
12
continuing in the case of clause (z) above but (in the case of clauses (x) and
(z)) so long as no Indenture Event of Default which is not a, or does not arise
out of a, Default or Event of Default has occurred and be continuing, elect to
purchase all, but not less than all, Equipment Notes then outstanding (at par
plus, solely in the case of clause (z) above, the Make-Whole Amount); and
provided, that the Owner Participant may not so purchase the Equipment Notes in
--------
accordance with the foregoing at any time on or after the fifteenth (15th)
Business Day following receipt by it of notice of a proposed sale or disposition
of the Indenture Estate or any portion thereof, the Equipment Notes or any
interest of the Noteholders in the Trust Estate. Upon receipt of written notice
of such election from the Owner Participant, which notice in order to be
effective shall state that it is irrevocable (and shall constitute a recourse
obligation of Owner Participant) and shall designate a date not more than
fourteen calendar days thereafter as the purchase date, each Noteholder agrees
that it will, upon payment to it in the manner provided for in Section 2.04 from
the Owner Participant of an amount equal to the aggregate unpaid principal
amount of all Equipment Notes then held by such Noteholder (at par plus, solely
in the case of clause (z) above, the Make-Whole Amount), together with accrued
and unpaid interest thereon to the date of payment, plus all reasonable expenses
----
of the Indenture Trustee or such Noteholder associated therewith (and all other
sums then due and payable to such Noteholder hereunder, under such Equipment
Notes and the other Operative Agreements), forthwith sell, assign, transfer and
convey to the Owner Participant (without recourse, representation or warranty of
any kind except for its own acts), all of the right, title and interest of such
Noteholder in and to the Indenture Estate, this Indenture, all Equipment Notes
held by such Noteholder and the other Operative Agreements (excluding all right,
title and interest under any of the foregoing to the extent such right, title or
interest is with respect to an obligation not then due and payable or past due
(other than any claims in respect of past due interest or other amounts to the
extent included in the purchase price of the Equipment Notes), with respect to
any action or inaction or state of affairs occurring or existing prior to such
sale) and the Owner Participant shall assume all of such Noteholder's
obligations under the other Operative Agreements and this Indenture arising
subsequent to such purchase and sale. The Indenture Trustee shall not exercise
any remedies hereunder and, without the consent of the Owner Participant, under
the Lease, during the period from the time of receipt of such notice of such
election until the date on which such purchase is required to occur pursuant to
the terms of the preceding sentence. If the Owner Participant shall so request,
such Noteholder will comply with all the provisions of Section 2.07 (other than
those relating to Securities Act compliance and those obligations set out in the
last sentence of Section 2.07) to enable new Equipment Notes to be issued to the
Owner Participant in such denominations as the Owner Participant shall request.
In the case of any such purchase, upon the request of any Noteholder the Owner
Participant shall furnish to the Noteholders evidence that such transfer and
conveyance are exempt from registration under the Securities Act, and do not
violate any registration provision of any applicable state securities laws
(which evidence may include an opinion of counsel for the Owner Participant
satisfactory to the Noteholders). All charges and expenses required pursuant to
Section 2.09 in connection with the issuance of any such new Equipment Note
pursuant to this Section shall be borne by the Owner Participant.
SECTION 2.13. Equipment Notes in Respect of Replacement Aircraft. Upon
--------------------------------------------------
the execution and delivery of an Indenture Supplement covering a Replacement
Airframe and/or
13
Replacement Engine, as provided in Section 5.06, each Equipment Note shall be
deemed to have been issued in connection with such Replacement Airframe and/or
Replacement Engine and each Equipment Note issued thereafter upon a transfer or
exchange of, or as a replacement for, an Equipment Note, shall be designated as
having been issued in connection with such Replacement Airframe and/or
Replacement Engine, but without any other change therein except as provided for
in this Article II.
SECTION 2.14. Increased Costs. (a) If the enactment, adoption or
---------------
promulgation, after the Delivery Date, of any applicable law or regulation or
any change, after the Delivery Date, in any applicable law, rule, regulation,
guidance or ruling or any exceptions thereto (or any applicable published
change, after the Delivery Date, in the interpretation thereof (whether or not
having force of law) or any compliance by a Noteholder with any request from
such authority (provided that the observance thereof is in accordance with the
reasonable practice of lenders in the country concerned)) of general
applicability by any governmental, fiscal, monetary or other authority charged
with the administration or application thereof (in each of the foregoing cases
which is binding upon such Noteholder, in any applicable jurisdiction for
purposes of funding or maintaining any Equipment Note or the participation by
such Noteholder in the transactions contemplated hereby and by the other
Operative Agreements), shall:
(i) impose, modify, or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding any such requirement with respect to which such
Noteholder is entitled to compensation during the relevant interest period
and excluding any regulatory change the effect of which is the
implementation of the Basle Accord as in effect on the date hereof) against
deposits with, or credit extended by, such Noteholder by reason of the
funding or maintaining of its Equipment Note;
(ii) impose, modify or deem applicable a capital adequacy
requirement which such Noteholder can establish has the effect of
increasing the amount of capital required to be maintained by such
Noteholder, but only to the extent that such increase is directly
attributable and allocable to such Noteholder's obligations to fund and
maintain its Equipment Note; or
(iii) impose, modify or deem applicable any tax (not excluded
from indemnification under Article 6 of the Participation Agreement), or
other governmental, monetary or other charge or other condition which in
each case is in the nature of such reserve, special deposit or similar
requirement;
and the result of any of the foregoing shall be to increase in the aggregate and
by a material amount the costs to such Noteholder, but only to the extent that
such increase is directly attributable and allocable to funding and maintaining
the Equipment Notes (any such reserve, special deposit, similar requirement, tax
or other governmental, monetary or other charge or condition or capital adequacy
cost hereinafter collectively referred to as an "Increased Cost") and provided,
that in assessing the
14
effect of such enactment, adoption or change or condition and determining such
Increased Cost, such Noteholder shall evaluate and apply the requirements in
respect of its Equipment Notes hereunder in a manner which is no less favorable
to the Lessee than, and shall not discriminate in such evaluation and
application in relation to, and with respect to clauses (i) or (iii) above, the
other deposits with or credit extended by the Noteholder involving any other
Persons, and with respect to clause (ii) above, comparable funding obligations
held by the Noteholder of the same type and category involving other Persons,
then the Noteholder shall promptly provide the Owner Trustee and the Lessee with
written notice of such event giving rise to such Increased Cost. Such notice
shall be accompanied by an Officer's Certificate describing in reasonable detail
(a) the events giving rise to such Increased Cost, (b) the basis for determining
and allocating such Increased Cost with respect to the Equipment Notes held by
such Noteholder and a statement to the effect that the determination for such
Increased Costs in connection with its obligations under this transaction has
been made in a manner that does not discriminate against the Owner Trustee or
the Lessee, and (c) a good faith estimate of the amount expected to be incurred
by the Noteholder (such estimate to set out in reasonable detail the basis on
which it has been prepared).
Within thirty (30) days of the receipt of an invoice for Increased Cost
incurred following (or accompanying such notice), the Owner Trustee shall remit
the amount due to such Noteholder.
Notwithstanding any of the provisions hereof, such Noteholder shall not be
entitled to serve notice to cause a payment of Increased Cost if (i) the
Noteholder (or any office, branch or affiliate thereof) incurred the relevant
Increased Cost as a result of the Noteholder's (or any office, branch or
affiliate thereof) having acted in a manner contrary to, or failed to act in a
manner required by, the Applicable Laws or (ii) the relevant Increased Cost was
imposed with respect to the period prior to receipt by the Owner Trustee and the
Lessee of the notice with respect thereto pursuant to the first paragraph of
this Section.
(b) Upon the receipt of any notice of Increased Cost, the Noteholder
and the Lessee shall consult in good faith and the Noteholder shall use its
reasonable best efforts to avoid or mitigate the amount of any Increased Cost,
including without limitation, by assigning the rights and obligations of the
Noteholder hereunder (if other than the Loan Participant) to another office,
branch, subsidiary or affiliate of the Noteholder or by selling or transferring
the rights, interests and obligations of the Noteholder hereunder or under any
other Operative Agreement to another bank, financial or lending institution,
subject to the terms hereof, that would not be subject to any such Increased
Cost, provided that the Noteholder shall not be required to take such action to
avoid or mitigate such Increased Cost hereunder if such action would result in
any economic, legal or regulatory disadvantage, or any adverse tax consequence
to the Noteholder (other than (i) economic disadvantage for which the Lessee
agrees to indemnify the Noteholder on an After Tax Basis and in a manner
reasonably acceptable to the Noteholder, or (ii) adverse tax consequences for
which the Lessee agrees to indemnify the Noteholder on an After Tax Basis and in
a manner reasonably acceptable to the Noteholder).
15
(c) The Owner Trustee shall not be required to make payments under
this Section to any Noteholder if (i) a claim hereunder arises through
circumstances peculiar to such Noteholder and which do not affect commercial
lenders in the same jurisdiction generally, (ii) the claim arises out of a
voluntary relocation by such Noteholder of its lending office, (iii) such
Noteholder is not also seeking indemnification against similar increased costs,
to the extent it is entitled to do so, in transactions with substantial
borrowers (it being agreed that an Officer's Certificate to the contrary from
any such Noteholder shall constitute conclusive evidence of such fact), (iv) a
claim is directly attributable to any corresponding claim for Increased Cost
which is made on such Noteholder by any Person which has funded such
Noteholder's purchase of its Equipment Notes or (v) such Noteholder is the Loan
Participant.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution. (a) Except as otherwise
-----------------------
provided in Section 3.03, each installment of Basic Rent, any payment of
interest payable on any Payment Date or on overdue installments of Basic Rent
and any payment received by the Indenture Trustee as contemplated by Section
4.03 shall be promptly distributed in the following order of priority:
first, so much of such installment or payment as shall be required to
-----
pay in full the aggregate amount of the payment or payments of principal
and interest and other amounts (as well as any interest on overdue
principal and, to the extent permitted by law, on interest and other
amounts) then due on or in respect of the Equipment Notes shall be
distributed to the holders thereof ratably, without priority of any one
Equipment Note over any other Equipment Note, in the proportion that the
amount of such payment or payments then due under each Equipment Note bears
to the aggregate amount of the payments then due under all Equipment Notes;
second, the balance, if any, of such installment or payment remaining
------
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement; provided, however, that if a Specified
-------- -------
Indenture Default or an Indenture Event of Default shall have occurred and
be continuing, then such balance shall not be distributed as provided in
this clause "second" but shall be held by the Indenture Trustee as part of
------
the Indenture Estate until whichever of the following shall first occur:
(i) all Specified Indenture Defaults and Indenture Events of Default shall
have been cured or waived, in which event such balance shall, to the extent
not theretofore distributed as provided herein, be distributed as provided
in this clause "second", or (ii) Section 3.02 or Section 3.03 shall be
------
applicable, in which event such balance shall be distributed in accordance
with the provisions of said Section 3.02 or Section 3.03, as the case may
be, or (iii) such installment or payment shall have been held for a period
in excess of 270 days (during which no Specified Indenture Default or
Indenture Event of Default which is not a, or arise out of a, Default or
Event of
16
Default shall have occurred and be continuing and during which period the
Indenture Trustee and the Noteholders shall not have been stayed or
otherwise precluded by operation of law from taking action to accelerate
the Equipment Notes or to declare the Lease in default or to exercise
remedies hereunder and thereunder), in which event such balance shall, to
the extent not theretofore applied as provided herein, be distributed as
provided in this clause "second" disregarding this proviso.
------
(b) Except as otherwise provided in Section 3.03, if (i) as a result
of any failure by the Lessee to pay Basic Rent in full on any date when an
installment of Basic Rent is due, or (ii) for any other reason there shall not
have been distributed in full on any Basic Rent Payment Date the amounts
described in clause "first" of Section 3.01(a), the Indenture Trustee shall, if
-----
so requested by a Majority in Interest of Noteholders, distribute other payments
of the character referred to in Section 3.04(b) then held by it or thereafter
received by it, to the holders of all Equipment Notes to the extent necessary to
enable the Indenture Trustee to satisfy in full the amounts described in such
clause "first."
-----
SECTION 3.02. Lease Termination, Event of Loss and Replacement. (a)
------------------------------------------------
Except as otherwise provided in Section 3.03, any payment received by the
Indenture Trustee as a result of any payment or prepayment described in Section
2.10, shall be applied to prepayment of the Equipment Notes and to all other
amounts payable thereunder or hereunder or under the other Operative Agreements
as provided in Section 2.10 by applying such funds in the following order of
priority: first, so much of such payment as shall be necessary to reimburse the
-----
Indenture Trustee for any reasonable costs or expenses incurred in connection
with such prepayment shall be paid to the Indenture Trustee; second, so much of
------
such payment as shall be necessary to pay all amounts then due to the holders of
the Equipment Notes pursuant to Section 2.10 shall be distributed to such
holders, ratably, without priority of any one Equipment Note holder over any
other such holder; and third, the balance, if any of such payment remaining
-----
thereafter shall be distributed in the manner set forth in clause "sixth" of
-----
Section 3.03. With respect to any payment received as a result of the occurrence
of an Event of Loss with respect to the Airframe or any Engine, if a Replacement
Airframe or Replacement Engine shall be substituted for the Airframe or Engine
subject to such Event of Loss as provided in Section 8(a)(i) of the Lease and
Section 5.06, any proceeds of the Aircraft (or related insurance or requisition
proceeds or payment from any governmental authority) which result from such
Event of Loss and are paid to the Indenture Trustee shall be held by the
Indenture Trustee as part of the Indenture Estate as security for the
obligations of the Lessee under the Operative Agreements and invested in
accordance with the terms of Section 3.07, and, unless otherwise applied in
accordance with the terms hereof, such proceeds (and such investment earnings)
shall, to the extent payable to the Lessee under the Lease, be released to the
Lessee at the Owner Trustee's written request upon the release of such damaged
Airframe or Engine and the replacement thereof as herein provided.
(b) Except as otherwise provided in Section 3.03, any amounts received
directly or indirectly from any governmental authority, insurer or other party
pursuant to any provision of Section 8 or 9 of the Lease or otherwise as the
result of loss or damage not constituting such an
17
Event of Loss with respect to the Airframe or any Engine, or as a result of such
loss or damage constituting such an Event of Loss if and to the extent that such
amounts would at the time be required to be paid to the Lessee pursuant to said
Section 8 or 9 but for the fact that a Specified Default or Event of Default
shall have occurred and be continuing, shall be held by the Indenture Trustee,
as security for the obligations of the Lessee under the Operative Agreements and
shall be invested in accordance with the terms of Section 3.07 and at such time
as the conditions for payment to the Lessee specified in said Section 8 or 9
shall be fulfilled and there shall not be continuing any Specified Default or
Event of Default, such amount, and the proceeds of any investment thereof,
shall, to the extent not applied to such obligations of the Lessee, be paid to
the Lessee to the extent provided in the Lease.
SECTION 3.03. Payment After Indenture Event of Default, etc. Except as
---------------------------------------------
otherwise provided in Sections 3.04(c) and 3.05(ii), all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and so long as such Indenture Event of Default shall
be continuing and after either (i) the Indenture Trustee shall foreclose the
Lien of this Indenture or shall be pursuing remedies in respect thereof or (ii)
after the Equipment Notes shall have become due and payable as provided in
Section 4.04(b) or (c), as well as all payments or amounts then held by the
Indenture Trustee as part of the Indenture Estate, shall be promptly distributed
by the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to
-----
reimburse the Indenture Trustee for any tax, fees, expense, charge or other
loss (including, without limitation, all amounts expended or incurred at
the expense of, or charged upon the tolls, rents, revenues, issues, income,
products and profits of, the property included in the Indenture Estate
pursuant to Section 4.05(b)) incurred by the Indenture Trustee (to the
extent reimbursable pursuant to the terms of this Indenture and not
previously reimbursed) (including, without limitation, the expenses of any
sale, taking or other proceeding, reasonable attorneys' fees and expenses,
court costs, and any other expenditures incurred or expenditures or
advances made by the Indenture Trustee in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by the
Indenture Trustee, liquidated or otherwise, upon such Indenture Event of
Default) shall be applied by the Indenture Trustee in reimbursement of such
expenses;
second, so much of such payments or amounts remaining as shall be
------
required to reimburse the holders of the Equipment Notes in full for
payments made pursuant to Section 5.03 (to the extent not previously
reimbursed) shall be distributed to such holders, and if the aggregate
amount remaining shall be insufficient to reimburse all such payments in
full, it shall be distributed ratably, without priority of any Equipment
Note over any other, in the proportion that the aggregate amount of the
unreimbursed payments made by each such holder of Equipment Notes pursuant
to Section 5.03 bears to the aggregate amount of the unreimbursed payments
made by all holders of Equipment Notes pursuant to Section 5.03;
18
third, so much of such payments or amounts remaining as shall be
-----
required to pay in full to the holders of Equipment Notes all other amounts
payable pursuant to the indemnification provisions of Article 6 or 7 of the
Participation Agreement or pursuant to any other provision of any Operative
Agreement and secured hereunder (other than amounts payable pursuant to
clause "second", "fourth" or "fifth" of this Section 3.03) to the holders
------ ------ -----
of Equipment Notes and remaining unpaid shall be distributed to such
holders, and if the aggregate amount remaining shall be insufficient to pay
all such amounts in full, it shall be distributed ratably, without priority
of any Equipment Note over any other, in the proportion that the aggregate
amount due each holder of Equipment Notes under this clause "third" bears
-----
to the aggregate amount due all holders of Equipment Notes under this
clause "third";
-----
fourth, so much of such payments or amounts remaining as shall be
------
required to pay in full the aggregate amount of all accrued but unpaid
interest to the date of distribution on the Equipment Notes shall be
distributed to the holders of this Equipment Notes, and if the aggregate
amount remaining shall be insufficient to pay all such amounts in full, it
shall be distributed ratably, without priority of any one Equipment Note
over any other, in the proportion that the aggregate amount of all accrued
but unpaid interest to the date of distribution on each Equipment Note
bears to the aggregate amount of all accrued but unpaid interest to the
date of distribution on all Equipment Notes;
fifth, so much of such payments or amounts remaining as shall be
-----
required to pay in full the aggregate unpaid principal amount of all
Equipment Notes shall be distributed to the holders of the Equipment Notes,
and if the aggregate amount remaining shall be insufficient to pay all such
amounts in full, it shall be distributed ratably, without priority of any
one Equipment Note over any other, in the proportion that the aggregate
unpaid principal amount of each Equipment Note bears to the aggregate
unpaid principal amount of all Equipment Notes; and
sixth, the balance, if any, of such payments or amounts remaining
-----
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
SECTION 3.04. Certain Payments. (a) Except as otherwise provided in
----------------
this Indenture, any payments received by the Indenture Trustee for which
provision as to the application thereof is made in the Lease or the
Participation Agreement shall be applied forthwith to the purpose for which such
payment was made in accordance with the terms thereof.
(b) Except as otherwise provided in Section 3.01(b), Section 3.02(a)
or Section 3.03, the Indenture Trustee will distribute, promptly upon receipt,
any indemnity payment or payment of damages received by it from the Owner
Trustee, the Trust Company, the Lessee or the Owner Participant in respect of
the Indenture Trustee in its individual capacity or any Noteholder either
pursuant to Article 6 or 7 of the Participation Agreement or as Supplemental
Rent or otherwise, directly to the Person entitled thereto.
19
(c) Notwithstanding anything to the contrary contained in this
Indenture, any sums received by the Indenture Trustee which constitute Excluded
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto.
SECTION 3.05. Other Payments. Any payments received by the Indenture
--------------
Trustee whose purpose or intended payee is not identified shall be held by the
Indenture Trustee pending identification of the intended purpose of such
payment, and thereafter, such payments shall be made for the intended purpose or
to the intended payee or, if no provision as to the application thereof is made
in this Indenture, shall be distributed by the Indenture Trustee (i) to the
extent received or realized at any time prior to the payment in full of all
obligations to the Noteholders secured by the Lien of this Indenture, in the
order of priority specified in Section 3.01 subject to the proviso thereto, and
(ii) to the extent received or realized at any time after payment in full of all
Secured Obligations, in the following order of priority: first, in the manner
-----
provided in clause "first" of Section 3.03 and second, in the manner provided in
-----
clause "sixth" of Section 3.03.
-----
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
-------------------------
Whereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of funds of the type received by the Indenture
Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "second" of Section 3.01(a) or clause "sixth" of
------ -----
Section 3.03 shall be distributed by wire transfer of funds of the type received
by the Indenture Trustee to the account designated on Schedule II to the
Participant Agreement under the heading "Owner Participant" or to such other
account as the Owner Participant may specify from time to time by notice to the
Indenture Trustee.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any
-----------------------------------------------
amounts held by the Indenture Trustee pursuant to the proviso set forth in
clause "second" of Section 3.01(a), pursuant to Section 3.02, pursuant to the
------
second proviso to the fourth sentence of Section 4.03 or pursuant to any
provision of any other Operative Agreement providing for amounts to be held by
the Indenture Trustee shall be invested by the Indenture Trustee from time to
time in investments permitted pursuant to Section 15 of the Lease as directed in
writing by the Owner Trustee or, in the event the Owner Trustee shall not so
specify, as directed in writing by the Lessee. Unless otherwise expressly
provided in this Indenture, any income realized as a result of any such
investment, net of the Indenture Trustee's reasonable fees and expenses in
making such investment, shall be held and applied by the Indenture Trustee in
the same manner as the principal amount of such investment is to be applied and
any losses, net of earnings and such reasonable fees and expenses, shall be
charged against the principal amount invested. The Indenture Trustee shall not
be liable for any loss resulting from any investment required to be made by it
under this Indenture other than by reason of its willful misconduct or gross
negligence or any negligence in the handling or application of funds, and any
such investment may be sold (without regard to its maturity) by the Indenture
Trustee without
20
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
SECTION 3.08. Taxes; Withholding. The Indenture Trustee agrees, to
------------------
the extent required by applicable law, to withhold from each payment due
hereunder or under any Equipment Note, United States withholding taxes at the
appropriate rate, and, on a timely basis, to deposit such amounts with an
authorized depository and make such filings and other reports in connection
therewith, and in the manner required under applicable law. The Indenture
Trustee shall promptly furnish to each Noteholder that is a Non-U.S. Person (as
defined below) (but in no event later than the date 30 days after the due date
thereof) a U.S. Treasury Form 1042S (or similar forms as at any relevant time in
effect), if applicable, indicating payment in full of any Taxes withheld from
any payments by the Indenture Trustee to such persons together with all such
other information and documents reasonably requested by the Noteholder and
necessary or appropriate to enable each Noteholder to substantiate a claim for
credit or deduction with respect thereto for income tax purposes of the country
where each Noteholder is located. In the case of a Noteholder that is a Non-U.S.
Person (as defined below), the Noteholder shall provide the Indenture Trustee
with such forms and other documentation (collectively, "Tax Forms") as may be
necessary or desirable to enable such Noteholder to claim an exemption from, or
reduced rate of, such taxes and provided that such Noteholder has furnished the
Indenture Trustee with the requested Tax Forms and has not notified the
Indenture Trustee of the withdrawal or inaccuracy of any Tax Forms prior to the
date of each interest payment, only the reduced amount (if any) required by
applicable law or treaty shall be withheld from payments under the Equipment
Notes held by such Noteholder. Provided that each Noteholder that is a Non-U.S.
Person has furnished to the Indenture Trustee either (x) a properly completed
and currently effective U.S. Treasury Form 1001 or U.S. Treasury Form W-8 (or
such successor forms as may be required by the United States Treasury Department
establishing a complete exemption from or a reduced rate of United States
federal withholding Taxes) during the calendar year in which the payment is made
or in either of the two preceding calendar years (or such longer or shorter
period as may be required by the United States Treasury Department), and has not
notified the Indenture Trustee of the withdrawal of such Form prior to the date
of each interest payment, or (y) a properly completed and currently effective
U.S. Treasury Form 4224 (or such successor form as may be required by the United
States Treasury Department) or other certificate or form establishing a complete
exemption from or a reduced rate of United States federal withholding Taxes
during each calendar year before the first payment for the year is made and has
not notified the Indenture Trustee of the withdrawal of such Form or certificate
prior to the date of each interest payment, then no amount or only one reduced
amount required by applicable law shall be withheld from payments under the
Equipment Notes held by such Noteholder in respect to United States federal
income tax. In the case of a Noteholder that is not a Non-U.S. Person that has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Treasury Form W-9, no amount shall be withheld from payments under the
Equipment Notes held by such Noteholder in respect of United States federal
income tax. If any Noteholder has notified the Indenture Trustee that any of the
foregoing forms or certificates is withdrawn or inaccurate, or if the Internal
Revenue Code or the regulations thereunder or the administrative interpretation
thereof are at any time after the date hereof amended to require such
withholding of United States federal
21
income taxes from payments under the Equipment Notes held by such Noteholder, or
if such withholding is otherwise required, the Indenture Trustee agrees to
withhold from each payment due to the relevant Noteholder withholding taxes at
the appropriate rate under applicable law, and will, as more fully provided
above, on a timely basis, deposit such amounts with an authorized depository and
make such reports, filings and other reports in connection therewith, and in the
manner required under applicable law. For the purpose hereof, a "Non-U.S.
Person" is a person who is not a "United States Person" as such term is defined
in Section 7701(a)(30) of the Code.
ARTICLE IV
COVENANTS; EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of the Trust Company and the Owner Trustee.
----------------------------------------------------
The Owner Trustee hereby covenants and agrees (the covenants and agreements in
clause (a) below being made by the Owner Trustee in its individual capacity
only) as follows:
(a) in the event a Responsible Officer of the Owner Trustee shall
have actual knowledge of an Indenture Event of Default or an Event of Loss,
the Owner Trustee will give prompt written notice of such Indenture Event
of Default or Event of Loss to the Indenture Trustee, the Lessee, the Owner
Participant and each Noteholder;
(b) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and other
instruments furnished to the Owner Trustee under the Lease, including,
without limitation, a copy of each report or notice received pursuant to
Section 9(g) of the Lease, to the extent that the Operative Agreements do
not provide that the same shall be furnished directly to such Noteholder or
the Indenture Trustee;
(c) the Owner Trustee will not (except as permitted herein)
assign or pledge or otherwise dispose of, so long as this Indenture shall
remain in effect and shall not have been terminated pursuant to Section
9.01, any of its right, title or interest hereby assigned to anyone other
than the Indenture Trustee, and, with respect to such right, title and
interest hereby assigned, will not, except in respect of Excluded Payments
or otherwise as provided in this Indenture or the Participation Agreement,
(1) accept any payment from the Lessee or any Permitted Sublessee, enter
into any agreement amending or supplementing any of the Indenture
Documents, execute any waiver or modification of, or consent under, the
terms of any of the Indenture Documents, (2) exercise any rights with
respect to the Indenture Estate, (3) settle or compromise any claim arising
under any of the Indenture Documents, or (4) submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any of the Indenture Documents to arbitration thereunder; and
22
(d) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Operative Agreements and, except as contemplated by the
Operative Agreements, will not contract for, create, incur or assume any
indebtedness or guarantee, endorse or otherwise become contingently liable
in connection with the indebtedness of any other person.
SECTION 4.02. Indenture Event of Default. "Indenture Event of
-------------------------- ------------------
Default" means any of the following events (whatever the reason for such
-------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administration or governmental body) and each such
Indenture Event of Default shall continue so long as, but only so long as, it
shall not have been remedied:
(a) any Event of Default; or
(b) the failure (other than by reason of a Default or Event of
Default) of the Owner Trustee to pay to the Indenture Trustee when due any
payment of principal of, or interest on, any Equipment Note and such
failure shall have continued unremedied for 5 Business Days, or the failure
(other than by reason of a Default or Event of Default) of the Owner
Trustee to pay to the Indenture Trustee when due any other amount due and
payable by the Owner Trustee hereunder, under any Equipment Note or under
any other Operative Agreement, and such failure shall have continued
unremedied for 15 days after receipt by the Owner Trustee and the Owner
Participant of written notice thereof from the Indenture Trustee or the
Majority in Interest of Noteholders; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 5.03(b) of the Participation Agreement or
required to be discharged by the Owner Participant pursuant to Section
5.01(b) of the Participation Agreement shall remain undischarged for a
period of 30 days after a Responsible Officer of the Trust Company or the
Owner Participant, as the case may be, shall have actual knowledge of such
Lessor's Lien; or
(d) any representation or warranty made by the Owner Trustee or
the Owner Participant or the Trust Company herein or in the Participation
Agreement, or made by any Owner Participant Guarantor in its Owner
Participant Guaranty, shall prove to have been false or incorrect when made
in any material respect to the Noteholders and, but only if such
misrepresentation is capable of being corrected, shall remain uncured and
material for a period of 30 days after notice thereof from the Indenture
Trustee or the Majority in Interest of Noteholders to such Person; or
23
(e) any failure by the Owner Trustee to observe any of its
covenants in Section 4.01(c) or (d) herein or any failure by the Owner
Participant to observe any of its covenants in Section 5.01(c) or 5.01(e)
of the Participation Agreement or any failure by the Owner Trustee or the
Owner Participant to observe any of its respective covenants in the first
and fourth sentences of Section 5.11 of the Participation Agreement; or
(f) except as provided in paragraph (e) above or paragraph (i) or
(j) of this Section 4.02, any failure by the Owner Trustee or the Trust
Company to observe or perform any other covenant or obligation of the Owner
Trustee or the Trust Company, as the case may be, contained in this
Indenture or in the Participation Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of the
Owner Participant contained in the Participation Agreement or any failure
by any Owner Participant Guarantor to perform any covenant or obligation of
such Owner Participant Guarantor under its Owner Participant Guaranty
which, in any case, is not remedied within a period of 30 calendar days
after notice thereof from the Indenture Trustee or Majority in Interest of
Noteholders has been given to the Owner Trustee, the Trust Company, the
Owner Participant or Owner Participant Guarantor, as the case may be,
provided, however, if there exists no material risk of sale, loss or
--------- -------
forfeiture of the Aircraft or any additional liability to the Indenture
Trustee or Loan Participant, and if the Owner Trustee, the Trust Company,
the Owner Participant or the Owner Participant Guarantor, as the case may
be, shall have undertaken to cure any such failure and, notwithstanding the
reasonable diligence of the Owner Trustee, the Trust Company, the Owner
Participant or the Owner Participant Guarantor, as the case may be, in
attempting to cure such failure, such failure is not cured within said 30-
day period but is curable with future due diligence, there shall exist no
Indenture Event of Default under this Section 4.02 so long as the Owner
Trustee, the Trust Company, the Owner Participant or the Owner Participant
Guarantor, as the case may be, is proceeding with due diligence to cure
such failure and such failure is in fact cured within 150 days; or
(g) either the Trust Estate or the Owner Trustee (and not in its
individual capacity) or the Owner Participant or any Owner Participant
Guarantor shall (i) be generally not paying its debts as they become due,
(ii) file, or consent by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, (iii) make an assignment for the
benefit of its creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers of itself or of any
substantial part of its property, or (v) take corporate or comparable
action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Trust Estate or the
Owner Trustee (not in its individual capacity) or the Owner Participant or
any Owner Participant Guarantor, a custodian, receiver, trustee or other
officer with similar powers with respect to the Trust
24
Estate or the Owner Trustee (not in its individual capacity) or the Owner
Participant or any such Owner Participant Guarantor, or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidation of the Trust Estate or the Owner Trustee (not in its
individual capacity) or the Owner Participant or any such Owner Participant
Guarantor, or if any petition for any such relief shall be filed against
the Trust Estate or the Owner Trustee (not in its individual capacity) or
the Owner Participant or any such Owner Participant Guarantor, and such
petition shall not be dismissed within, or the order shall be unstayed and
remain in effect for a period of, 60 days; or
(i) any failure by the Trust Company to give notice, or to
resign, if required by Section 5.02(b) of the Participation Agreement, or
(if the Trust Company shall have given such notice and resigned as required
by said Section 5.02(b)) a successor Owner Trustee shall not have been
appointed and qualified within 30 days after the Trust Company's ceasing to
be a "Citizen of the United States", unless such failure does not adversely
affect the Lien of this Indenture; or
(j) the Owner Trustee, the Trust Company or the Owner Participant
shall do or fail to do any act, or shall fail to meet any condition, and as
a result thereof the Lien of this Indenture shall cease to be a valid first
priority Lien on the Indenture Estate, unless such failure is caused by a
Default or Event of Default; or
(k) any disaffirmation or repudiation by any Owner Participant
Guarantor of its obligations under its Owner Participant Guaranty.
Notwithstanding any provision of Section 4.02(g) or (h) to the contrary, if the
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation of the Trust Company shall have caused an
Indenture Default under Section 4.02(g) or (h), then no such Indenture Default
shall be deemed to have occurred so long as the Owner Participant is diligently
seeking to, and does replace the Trust Company then serving as Owner Trustee
within forty-five days after the date of such Indenture Event of Default;
provided, however, the Owner Participant shall not be entitled to cure such an
-------- -------
Indenture Event of Default by replacing the then existing Owner Trustee, if the
Indenture Trustee's rights in the Indenture Estate or any material portion
thereof, in the reasonable judgment of the Indenture Trustee or a Majority in
Interest of Noteholders, would be impaired either by such forty-five (45) day
delay (or any portion thereof) or by the Owner Participant's replacing the Owner
Trustee.
SECTION 4.03 Certain Cure Rights. Upon an Event of Default in payment
-------------------
of any installment of Basic Rent due under the Lease, the Owner Participant may,
but shall not be required to, within 10 Business Days after such Event of
Default, without the consent or concurrence of any Noteholder, pay, as provided
in Section 2.04, for application in accordance with Section 3.01 a sum equal to
the amount of all (but not less than all) principal and accrued interest
(including
25
interest, if any, on overdue payments of principal and interest) then due on the
Equipment Notes and payable out of such overdue Basic Rent. In the event of any
default by the Lessee in any obligation under the Lease other than the payment
of Basic Rent, if such default can be remedied by the payment of money and the
Owner Participant shall furnish the Owner Trustee with all funds necessary for
remedying such default, the Owner Participant may, within thirty (30) days after
the expiry of the applicable grace period specified in the Lease with respect to
such default, without the consent or concurrence of any Noteholder, instruct the
Owner Trustee to exercise the Owner Trustee's rights under Section 18 of the
Lease to perform such obligation on behalf of the Lessee. Solely for the purpose
of determining whether there exists an Indenture Event of Default, (a) any
timely payment by the Owner Participant pursuant to, and in compliance with, the
first sentence of this Section 4.03 shall be deemed to remedy (but solely for
purposes of this Indenture) any default by the Lessee in the payment of
installments of Basic Rent theretofore due and payable and to remedy (but solely
for purposes of this Indenture) any default by the Owner Trustee in the payment
of any amount of principal and interest due and payable under the Equipment
Notes and (b) any timely performance by the Owner Trustee of any obligation of
the Lessee under the Lease pursuant to, and in compliance with, the second
sentence of this Section 4.03 shall be deemed to remedy (but solely for purposes
of this Indenture) any Event of Default to the same extent that like performance
by the Lessee itself would have remedied such Event of Default (but no such
remedy shall relieve the Lessee of its duty to pay all Rent and perform all of
its obligations pursuant to the Lease). If, on the basis specified in the
preceding sentence, any Events of Default shall have been remedied, then any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based solely
upon such Events of Default, shall be deemed to be rescinded, and the Owner
Participant shall (to the extent of any such payments made by it) be subrogated
to the rights of the holders of the Equipment Notes under Section 3.01(a), to
receive from the Indenture Trustee such payment of overdue Rent (and the payment
of interest on account of such Rent being overdue) and shall be entitled, so
long as no other Indenture Event of Default or Indenture Default shall have
occurred and be continuing or would result therefrom, to receive, subject to the
provisions of this Indenture, such payment upon receipt thereof by the Indenture
Trustee; provided that the Owner Participant shall not otherwise attempt to
--------
recover any such amount paid by it on behalf of the Lessee pursuant to this
Section 4.03 except by demanding of the Lessee payment of such amount or, so
long as such action is not inconsistent with any remedy then being exercised
against Lessee under or pursuant to the Lease, by commencing an action at law
against the Lessee for the payment of such amount; provided, further, that at no
-------- -------
time while an Indenture Event of Default (other than an Indenture Event of
Default which is a, or arises out of a, Default or Event of Default) shall have
occurred and be continuing shall any such demand be made or shall any such
action be commenced (or continued) and such subrogation shall be subordinate to
the rights of the Indenture Trustee and the Noteholders in respect of such
payment, and during any such period any amounts nevertheless received by the
Owner Participant in respect thereof shall be held in trust for the benefit of,
and promptly paid to, the Indenture Trustee for distribution as provided in
Section 3.03; and further provided that:
------- --------
(x) this Section 4.03 shall not apply with respect to any default in
the payment of Basic Rent due under the Lease if the Lessee itself shall
have theretofore failed to pay
26
Basic Rent in the manner required under the Lease (after giving effect to
any applicable grace period) on (i) each of the two Basic Rent Payment
Dates immediately preceding the date of such default, or (ii) a total of
five Basic Rent Payment Dates (including, solely for the purposes of this
paragraph (x), the Delivery Date as a Basic Rent Payment Date);
(y) the second sentence of this Section 4.03 shall cease to apply, and
no payment by the Owner Participant in respect of Supplemental Rent or
performance of any obligation of the Lessee under the Lease by the Owner
Trustee shall be deemed to remedy or to have remedied any Event of Default
for the purposes of this Indenture, if during the Term there shall have
been expended by the Owner Participant pursuant to the second sentence of
this Section 4.03 (and which shall have not been reimbursed by the Lessee
itself to the Owner Trustee for distribution to the Owner Participant) an
amount in the aggregate in excess of $1,000,000; and
(z) neither the Owner Trustee nor the Owner Participant shall have the
right to cure any Event of Default except as specified in this Section
4.03.
Except as hereinafter in this Section 4.03 provided during any period prior to
satisfaction of all Secured Obligations, the Owner Trustee shall not, as a
result of exercising the right to remedy any such Event of Default, obtain any
Lien on any of the property included in the Indenture Estate or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against the Lessee or any other party for the repayment of such costs or
expenses impair the prior right and security interest of the Indenture Trustee
in and to any of the property in the Indenture Estate.
SECTION 4.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, consistent
with this Section 4.04(a), exercise any or all of the rights and powers and
pursue any and all of the remedies pursuant to this Article IV and shall have
and may exercise all of the rights and remedies of a secured party under the
Uniform Commercial Code and, in the event such Indenture Event of Default is an
Indenture Event of Default referred to in paragraph (a) of Section 4.02 and
Section 4.03 shall either not apply or shall have ceased to apply with respect
to the relevant Event of Default, any and all of the remedies pursuant to
Section 17 of the Lease and all of the rights and remedies of a lessor under
applicable law and may take possession of all or any part of the properties
covered or intended to be covered by the Lien and security interest created
hereby or pursuant hereto and may exclude the Owner Participant, the Owner
Trustee and the Lessee and all persons claiming under any of them wholly or
partly therefrom. The Indenture Trustee agrees to give the Owner Trustee at
least 10 days' written notice of the date fixed for any public sale of the
Indenture Estate or of the date on or after which will occur the execution of
any contract providing for any private sale of the Indenture Estate (which
notice the parties hereto agree shall constitute commercially reasonable notice
under applicable law). At any sale of the Indenture Estate or any part thereof,
the Owner Trustee or the Owner Participant may bid for and purchase such
property. Without limiting any of the foregoing, it is understood and
27
agreed that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale. It is further
understood and agreed that if the Indenture Trustee shall proceed to foreclose
the Lien of this Indenture in respect of an Indenture Event of Default referred
to in paragraph (a) of Section 4.02, it shall, to the extent that it is then
entitled to do so hereunder and under the Lease, and is not then stayed or
prevented from doing so by operation of law or otherwise, proceed (to the extent
it has not already done so) to exercise one or more of the remedies referred to
in Section 17(a), (b), (c), (d) or (e) of the Lease (to the extent that any such
remedy referred to in Section 17(e)(ii) is comparable to any remedy referred to
in such Section 17(a), (b), (c), (d) or (e)(i) of the Lease) as it shall
determine in its sole good faith discretion or as it shall be directed by a
Majority in Interest of the Noteholders; provided that, if the Indenture Trustee
--------
is so stayed or prevented, it will not be entitled to proceed to foreclose the
Lien of this Indenture until the earlier of (x) actual repossession of the
Aircraft from the Lessee or the Owner Trustee, as the case may be, or (y) the
expiration of the Section 1110 Period (as hereafter defined); and for the
avoidance of doubt, it is expressly understood and agreed that, subject to the
immediately preceding proviso and to the immediately following proviso, the
above-described inability of the Indenture Trustee to exercise any right or
remedy under the Lease shall in no event and under no circumstance prevent the
Indenture Trustee from exercising all of its rights, powers and remedies under
this Indenture, including without limitation this Article IV; provided, further,
-------- --------
that the Indenture Trustee shall not foreclose upon or divest the Owner Trustee
of title to the Aircraft or the Lease in the event the Lessee (or the bankruptcy
trustee or debtor-in-possession) with the approval of the relevant court either
agrees to perform the Lease in accordance with Section 1110 of the Bankruptcy
Code or assumes the Lease in accordance with Section 365 of the Bankruptcy Code,
but only so long as the Lessee (or the bankruptcy trustee or debtor-in-
possession) is in compliance with the provisions of such agreement under Section
1110 of the Bankruptcy Code or of the Lease as so assumed, as the case may be,
in all respects. For purposes of this Section 4.04(a), the term "Section 1110
Period" means the longer of (1) the 60-day period from the date of the order for
relief under Chapter 11 of the Bankruptcy Code (or such longer period as then
may be in effect under Section 1110 of the Bankruptcy Code, including for this
purpose any extension of such period by the Indenture Trustee (as assignee of
the Owner Trustee) and the bankruptcy trustee or debtor-in-possession pursuant
to Section 1110(b) thereof) and (2) the period during which the applicability of
said Section 1110 to the Aircraft is being contested in good faith by the Lessee
(or the bankruptcy trustee or debtor-in-possession) in judicial proceedings.
(b) If an Indenture Event of Default referred to in clause (g) or (h)
of Section 4.02 shall have occurred, then and in every such case the unpaid
principal of all Equipment Notes then outstanding, together with interest
accrued but unpaid thereon, and all other amounts due to the holders of the
Equipment Notes thereunder (but not including any amounts in respect of Make-
Whole Amount), hereunder and under the other Operative Agreements, shall, unless
the Indenture Trustee acting upon the instructions of the Majority in Interest
of Noteholders shall otherwise direct, immediately and without further act
become due and payable, without presentment, demand, protest or notice, all of
which are hereby waived.
28
(c) If any other Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee may at any time,
by written notice or notices to the Owner Trustee, declare all the Equipment
Notes to be due and payable, whereupon the unpaid principal of all Equipment
Notes then outstanding, together with accrued but unpaid interest thereon, and
all other amounts due to the holders of the Equipment Notes thereunder (but not
including any amounts in respect of Make-Whole Amount), hereunder and under the
other Operative Agreements, shall immediately and without further act become due
and payable without presentment, demand, protest or other notice, all of which
are hereby waived.
(d) Each Noteholder shall be entitled, at any sale pursuant to Section
17(b) of the Lease or this Article IV, to credit against any purchase price bid
at such sale by such Noteholder all or any part of the unpaid obligations owing
to such Noteholder and secured by the Lien of this Indenture. The Indenture
Trustee and the Noteholders shall, upon any such purchase, acquire good title to
the property so purchased, to the extent permitted by applicable law, free of
all rights of redemption.
SECTION 4.05. Return of Aircraft, etc. (a) If an Indenture Event of
------------------------
Default shall have occurred and be continuing, subject to Section 4.03 and
Section 4.04(a), at the request of the Indenture Trustee the Owner Trustee
shall promptly execute and deliver to the Indenture Trustee such instruments of
title and other documents as the Indenture Trustee may deem necessary or
advisable to enable the Indenture Trustee or an agent or representative
designated by the Indenture Trustee, at such time or times and place or places
as the Indenture Trustee may specify, to obtain possession of all or any part of
the Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If the Owner Trustee shall for any reason fail to execute
and deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents, and (ii) pursue all or part of the Indenture Estate wherever such
Indenture Estate may be found and may enter any of the premises of the Lessee
wherever it may be or be supposed to be and search for and take possession of
and remove the same. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Indenture.
(b) Upon every such taking of possession and during the continuance of
an Indenture Event of Default, the Indenture Trustee may, from time to time, at
the expense of the Indenture Estate, make all such reasonable expenditures for
maintenance, insurance, repairs, replacements, alterations, additions and
improvements to and of the Indenture Estate, as it may deem proper. In each such
case, the Indenture Trustee shall have the right to maintain, use, operate,
store, lease, control or manage the Indenture Estate and to carry on the
business and, without limiting the express provisions of Section 5.09, to
exercise all rights and powers of the Owner Participant and the Owner Trustee
relating to the Indenture Estate, as the Indenture Trustee shall deem best,
including the right to enter into any and all such agreements with respect to
the maintenance, insurance, use, operation, storage, leasing, control,
management or disposition of the Indenture
29
Estate or any part thereof as the Indenture Trustee may determine; and except
for Excluded Payments, the Indenture Trustee shall be entitled to collect and
receive directly all tolls, rents (including Rent), revenues, issues, income,
products and profits of the Indenture Estate and every part thereof. Such tolls,
rents (including Rent), revenues, issues, income, products and profits shall be
applied to pay the reasonable expenses of the use, operation, storage, leasing,
control, management or disposition of the Indenture Estate and of conducting the
business thereof, and of all maintenance, repairs, replacements, alterations,
additions and improvements, and to make all payments which the Indenture Trustee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trustee), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Indenture, as well as just and reasonable compensation for
the services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee.
SECTION 4.06. Remedies Cumulative. Subject to Sections 4.03, 4.04(a),
-------------------
4.08 and 5.09, each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Indenture shall be cumulative and
shall be in addition to every other right, power and remedy herein specifically
given or now or hereafter existing at law, in equity or by statute, and each and
every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by the Indenture Trustee, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right, remedy or power or in the pursuit of any remedy shall impair any
such right, power or remedy or be construed to be a waiver of any default on the
part of the Owner Trustee or the Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trustee, the Indenture Trustee and the Lessee shall, subject to
any determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Indenture Estate, and all rights, remedies
and powers of the Indenture Trustee shall continue as if no such proceedings had
been instituted.
SECTION 4.08. Waiver of Past Defaults. Upon written instructions from
-----------------------
a Majority in Interest of Noteholders, the Indenture Trustee shall waive any
past Indenture Default or Indenture Event of Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other Indenture Default or Indenture Event of Default or impair
any right consequent thereon;
30
provided, however, that in the absence of written instructions from all
-------- -------
Noteholders, the Indenture Trustee shall not waive any Indenture Default (i) in
the payment of the principal of, or interest on, or other amounts due under, any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under the proviso to the first sentence of Section 8.01 or under
the last sentence of Section 8.01, cannot be waived without the consent of each
Noteholder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notices. (a) Notice of Indenture Event of Default. In
------- ------------------------------------
the event a Responsible Officer of the Indenture Trustee shall have actual
knowledge of an Indenture Event of Default or of an Indenture Default arising
from a failure to pay Basic Rent, the Indenture Trustee shall forthwith give
prompt written notice by telex or facsimile thereof to the Owner Trustee, the
Owner Participant, the Lessee and the Noteholders. Subject to the terms of
Sections 4.03, 4.04(a), 4.08, 5.03 and 5.09, the Indenture Trustee shall take
such action, or refrain from taking such action, with respect to any such
Indenture Event of Default (including with respect to the exercise of any rights
or remedies hereunder) as the Indenture Trustee shall be instructed in writing
by the Majority in Interest of Noteholders. Subject to the provisions of
Sections 4.03, 4.04(a), 4.08, 5.03 and 5.09, if the Indenture Trustee shall not
have received instructions as above provided within twenty (20) calendar days
after receipt of notice of such Indenture Event of Default by the Noteholders,
the Indenture Trustee may, subject to instructions thereafter received pursuant
to the preceding provisions of this Section 5.01, take such action, or refrain
from taking such action, but shall be under no duty to take or refrain from
taking any action, with respect to any such Indenture Event of Default as it
shall determine advisable in the best interests of the Noteholders and shall use
the same degree of care and skill in connection therewith as a prudent person
would use under the circumstances in the conduct of such person's own affairs;
provided that the Indenture Trustee may not sell the Airframe or any Engine
--------
without the consent of the Majority in Interest of Noteholders. In the event the
Indenture Trustee shall at any time commence to foreclose or otherwise enforce
this Indenture, the Indenture Trustee shall forthwith notify the Noteholders,
the Owner Trustee, the Owner Participant and the Lessee. For all purposes of
this Indenture, in the absence of actual knowledge on the part of a Responsible
Officer in its Corporate Trust Department, in the case of the Indenture Trustee,
or its Corporate Trust Administration, in the case of the Owner Trustee, the
Indenture Trustee or the Owner Trustee, as the case may be, shall not be deemed
to have knowledge of any Indenture Default, any Default or any Event of Default
(except, in the case of the Indenture Trustee, the failure of the Lessee to pay
any installment of Basic Rent when due, which failure shall constitute knowledge
of an Indenture Default) unless notified in writing by the Lessee, the Owner
Trustee or one or more Noteholders. This Section 5.01, however, is subject to
the condition that, if at any time after the principal of the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) and before
any judgment or decree for the payment of the money so due, or any thereof,
shall be entered, all overdue payments of interest upon the Equipment Notes and
all other amounts payable under the Equipment Notes (except the principal of the
Equipment Notes which by such declaration shall have become payable) shall have
been duly paid, and every other
31
Indenture Default and Indenture Event of Default with respect to any covenant or
provision of this Indenture shall have been cured, then and in every such case a
Majority in Interest of Noteholders may (but shall not be obligated to), by
written instrument filed with the Indenture Trustee, rescind and annul such
acceleration and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Indenture Default or Indenture Event of
Default or impair any right consequent thereon.
(b) Other Notices. The Indenture Trustee will furnish to each
-------------
Noteholder promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and other
instruments furnished to the Indenture Trustee under any Operative Agreement or
received from the Owner Trustee pursuant to Section 4.01(b) to the extent the
same shall not have been otherwise directly distributed to the Noteholders
pursuant to the express provision of any other Operative Agreement.
SECTION 5.02. Action Upon Instructions. (a) Subject to the terms of
------------------------
Sections 4.03, 4.04(a), 4.08, 5.01, 5.03 and 5.09, upon the written instructions
at any time and from time to time of a Majority in Interest of Noteholders, the
Indenture Trustee shall take such of the following actions as may be specified
in such instructions: (i) exercise such election or option, or make such
decision or determination, or give such notice, consent, waiver or approval or
exercise such right, remedy or power or take such other action hereunder or
under any other Operative Agreement or in respect of any part or all of the
Indenture Estate as shall be specified in such instructions; (ii) take such
action with respect to, or to preserve or protect, the Indenture Estate
(including the discharge of Liens) as shall be specified in such instructions
and as is consistent with this Indenture; and (iii) take such other action in
respect of the subject matter of this Indenture as is consistent with the terms
hereof and the other Indenture Documents. The Indenture Trustee will execute and
the Owner Trustee will file or cause to be filed such continuation statements
with respect to financing statements relating to the security interests created
hereunder in the Indenture Estate as may be specified from time to time in
written instructions of a Majority in Interest of Noteholders or Lessee (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the execution form of such continuation statement so to
be filed).
(b) Subject to Sections 4.03, 4.04(a), 4.08, 5.01, 5.03 and 5.09, if
any Event of Default shall have occurred and be continuing, on request of a
Majority in Interest of Noteholders, the Indenture Trustee shall declare the
Lease to be in default and exercise such remedies under Section 17 of the Lease
as shall be specified in such request. The Indenture Trustee agrees to provide
to the Noteholders, the Owner Trustee and the Owner Participant concurrently
with such declaration by the Indenture Trustee, notice of such declaration by
the Indenture Trustee; provided that the failure to give any such notice to such
--------
Noteholders, the Owner Trustee or the Owner Participant shall not affect the
validity of such declaration.
SECTION 5.03. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action under Section 5.01
(other than the first sentence thereof) or 5.02 or Article IV unless the
Indenture Trustee shall have been indemnified by the
32
Noteholders against any liability, cost or expense (including reasonable counsel
fees) which may be incurred in connection therewith (except for the consequences
of the Indenture Trustee's gross negligence, willful misconduct and, in
receiving, handling or remitting funds only, its failure to use ordinary care).
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it on the terms provided above. The
Indenture Trustee shall not be required to take any action under Section 5.01
(other than the first sentence thereof) or 5.02 or Article IV, nor shall any
other provision of this Indenture be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or is otherwise
contrary to law.
SECTION 5.04. No Duties Except as Specified in Indenture or
---------------------------------------------
Instructions. The Indenture Trustee shall not have any duty or obligation to
------------
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this
Indenture or any part of the Indenture Estate, except as expressly provided by
the terms of this Indenture or as expressly provided in written instructions
from the Noteholders as provided in this Indenture; and no implied duties or
obligations shall be read into this Indenture against the Indenture Trustee. The
Indenture Trustee agrees that it will, in its individual capacity and at its own
cost and expense promptly take such action as may be necessary to duly discharge
all Liens on any part of the Indenture Estate which result from claims against
it in its individual capacity not related to the mortgaging to it of the
Aircraft or the administration of the Indenture Estate or any other transaction
contemplated by or pursuant to the Participation Agreement or any document
included in the Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Participation Agreement,
-----------------------------------------------------
Indenture or Instructions. The Owner Trustee and the Indenture Trustee agree
-------------------------
that they will not use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with the Aircraft or any other part of the Indenture Estate
except (i) in accordance with the terms of the Lease or the Participation
Agreement, or (ii) in accordance with the powers granted or reserved to, or the
authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant
to this Indenture and in accordance with the express terms hereof. Any breach of
this covenant resulting solely from an Event of Default shall not be an
Indenture Event of Default other than pursuant to Section 4.02(a).
SECTION 5.06. Replacement Airframes and Replacement Engines. At any
---------------------------------------------
time and from time to time, any Airframe or Engine which has been (or is to be
treated as if the same had been) subject to an Event of Loss and may be replaced
under Section 7(e) or 8(a) of the Lease by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 5.06 and the provisions of the applicable Section of the Lease,
and the Owner Trustee shall, from time to time, direct the Indenture Trustee to
execute and deliver
33
to or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine, as appropriate, from the Lien of this
Indenture and the Indenture Trustee shall execute and deliver such instrument as
aforesaid, but only upon receipt by or deposit with the Indenture Trustee of the
following (modified as appropriate if the Airframe or Engines and/or the
Replacement Airframe or Replacement Engines shall not, if permitted pursuant to
the Participation Agreement, be registered in the United States):
(a) A written request from the Owner Trustee, requesting such release and
specifically describing the Airframe and/or Engine(s) so to be released.
(b) A certificate signed by a duly authorized officer of the Lessee
stating the following:
1. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number and manufacturer's
serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number and manufacturer's serial
number) to be received as consideration for the Airframe to be
released;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Airframe the Owner Trustee will be the legal owner of
such Replacement Airframe free and clear of all Liens except Permitted
Liens (excluding for this purpose Lessor's Liens), and that such
Replacement Airframe has been or, substantially concurrently with such
replacement, is in the process of being duly registered in the name of
the Owner Trustee under Chapter 441 of the Act and that an
airworthiness certificate has been duly issued under Chapter 447 of
the Act with respect to such Replacement Airframe, and that such
registration and certificate is in full force and effect, and that the
Lessee will have the full right and authority to use such Replacement
Airframe;
(iv) that the insurance required by Section 9 of the Lease is in
full force and effect with respect to such Replacement Airframe and
all premiums then due thereon have been paid in full;
(v) that no Specified Default or Event of Default has occurred
and is continuing or would result from the making and granting of the
request for release and the addition of such Replacement Airframe;
(vi) that the release of the Airframe so to be released will not
impair the security of the Indenture (except in respect of such
release) or be in contravention of any of the provisions of the Lease;
and
34
(vii) that each of the conditions specified in Section 8(d) of
the Lease with respect to such Replacement Airframe have been
satisfied.
2. With respect to the replacement of any Engine (in addition to the
items required in Section 5.06(b)(1) above):
(viii) a description of the Engine, which shall be identified by
manufacturer's name and serial number;
(ix) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine to be released;
(x) that on the date of the Indenture Supplement relating to
the Replacement Engine, the Owner Trustee will be the legal owner of
such Replacement Engine, free and clear of all Liens except Permitted
Liens (excluding for this purpose Lessor's Liens);
(xi) that the release of the Engine so to be released will not
impair the security of the Indenture (except in respect of such
release) or be in contravention of any of the provisions of the Lease;
and
(xii) that each of the conditions specified in Section 7(e) of
the Lease with respect to such Replacement Engine have been satisfied.
(c) The appropriate instruments (i) transferring to the Owner Trustee
title to the Replacement Airframe or Replacement Engine to be received as
consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties generally available with respect to such Replacement Airframe or
Replacement Engine, and an Indenture Supplement subjecting such Replacement
Airframe or Replacement Engine and any related warranty right to the Lien
of this Indenture.
(d) [Intentionally Omitted].
(e) The opinion of counsel to the Lessee, reasonably satisfactory to the
Indenture Trustee and the Owner Trustee, stating that:
(1) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be lawfully released from
35
the Lien of this Indenture and all conditions precedent herein
provided for relating to such release have been complied with; and
(2) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the
Lease, the instruments subjecting such Replacement Airframe or
Replacement Engine to the Lease and to the Lien of this Indenture, as
the case may be, have been duly filed for recordation pursuant to the
Act, and no further action, filing or recording of any document is
necessary or advisable in order to establish and perfect the title of
the Owner Trustee to and the Lien of this Indenture on such
Replacement Aircraft or Replacement Engine and, as to any such
Replacement Airframe and associated Replacement Engines, that the
Owner Trustee and the Indenture Trustee, as the assignee of the Owner
Trustee's rights under the Lease, shall be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect thereto to the same
extent as immediately prior to such replacement.
SECTION 5.07. Indenture Supplements for Replacements. In the event of
--------------------------------------
a Replacement Airframe or Replacement Engine being substituted as contemplated
by Section 7(e) or 8(a) of the Lease, the Owner Trustee and the Indenture
Trustee agree for the benefit of the Noteholders and the Lessee, subject to
fulfillment of the conditions precedent and compliance by the Lessee with its
obligations set forth in Section 7(e) or 8(a) of the Lease, to execute and
deliver an Indenture Supplement with respect thereto as contemplated by Section
5.06(c), and, provided no Indenture Default or Indenture Event of Default shall
have occurred and be continuing, to execute and deliver to the Lessee an
appropriate instrument releasing the Airframe or Engine being replaced from the
Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the substitution
---------------------
of a Replacement Airframe as contemplated by Section 8(a) of the Lease or of a
Replacement Engine pursuant to Section 7(e) of the Lease and, in each case,
Section 5.06, all provisions of this Indenture relating to the Airframe or
Engine or Engines being replaced shall be applicable to such Replacement
Airframe or Replacement Engine or Engines with the same force and effect as if
such Replacement Airframe or Replacement Engine or Engines were the same
airframe or engine or engines, as the case may be, as the Airframe or Engine or
Engines being replaced but for the Event of Loss with respect to the Airframe or
Engine or Engines being replaced.
SECTION 5.09. Certain Rights of Owner Trustee and Owner Participant.
-----------------------------------------------------
Notwithstanding any other provision of this Indenture, including the Granting
Clause, or of any other Operative Agreement, the following rights shall be
reserved to the Owner Trustee or the Owner Participant, as the case may be, to
the extent described herein:
(a) to the exclusion of the Indenture Trustee, so long as no
Specified Indenture Default or Indenture Event of Default shall have
occurred and be continuing, (i) subject to and without affecting the
provisions of the Lease referred to in clauses (iv) and (v)
36
of the proviso of the first sentence of Section 8.01 hereof, to exercise
the rights, elections and options of the Owner Trustee to make any decision
or determination and to give any notice, consent, waiver or approval with
respect to any adjustments of Basic Rent, EBO Amount and Termination Value
under Section 3(d) of the Lease (but subject to Section 3(f) of the Lease)
and (ii) to exercise all rights as Owner Trustee with respect to any
determination of Fair Market Rental Value or Fair Market Sales Value under
Section 13 of the Lease and to exercise the rights of the Lessor (x) upon
the return of the Aircraft under Section 12 of the Lease and (y) under
Sections 13(a) and 13(b)(i)(B) or (C) of the Lease;
(b) the Owner Trustee shall have the right, together with the
Indenture Trustee, whether or not an Indenture Default or an Indenture
Event of Default shall have occurred and be continuing, to exercise all
rights of Owner Trustee under Sections 7(e) and 8 (with respect to
accepting any Replacement Aircraft or Replacement Engine), 18 (to the
extent permitted by Section 4.03) and 22 of the Lease;
(c) the Owner Trustee shall have the right, together with the
Indenture Trustee, whether or not an Indenture Default or an Indenture
Event of Default shall have occurred and be continuing, to exercise (i) the
rights of Owner Trustee under Section 9 (with respect to insurance coverage
and endorsements) of the Lease and to receive from the Lessee all notices,
financial statements, certificates, opinions of counsel, and other
documents and all information that the Lessee is permitted or required to
give or furnish to the Owner Trustee pursuant to the Lease and (ii)
inspection rights pursuant to Section 6 of the Lease;
(d) to the exclusion of the Indenture Trustee, whether or not an
Indenture Default or an Indenture Event of Default shall have occurred and
be continuing, (i) all rights of the Owner Trustee to exercise any
election or option or make any decision or determination or give or receive
any notice, consent, waiver, or approval in respect of, or demand, collect,
▇▇▇ for, or otherwise obtain all amounts due from the Lessee or Guarantor
on account of, any Excluded Payments, (ii) the right of the Owner Trustee
to maintain separate insurance pursuant to Section 9(f) of the Lease, and
(iii) the right of the Owner Trustee to solicit bids or retain the Aircraft
pursuant to Section 14 of the Lease;
(e) the right, jointly (but not independently) with the Indenture
Trustee, (1) so long as no Specified Indenture Default or Indenture Event
of Default shall have occurred and be continuing, to consent to or approve
or enter into any amendment, modification, or supplement of, or to grant
any waiver in respect of, any of the Indenture Documents (other than any
amendment, modification, supplement or waiver relating solely to the Loan
Participant or its interest in the Indenture Estate) and (2) if a Specified
Indenture Default or an Indenture Event of Default shall have occurred and
be continuing, to consent to or approve or enter into any amendment,
modification, or supplement of, or grant any waiver in respect of (A) any
provision of the Lease if the effect thereof is to decrease the amount or
defer the payment of any Rent, including any amounts payable under Section
3, 8, 13(b) or 14(b) of the Lease, (B) Sections 5, 12 and 17 (but in each
case only in respect of
37
return conditions) of the Lease, (C) Section 9 of the Lease in respect of
insurance policies and the proceeds thereof which by the terms of such
policies are payable to the Owner Participant or the Owner Trustee and not
to the Indenture Trustee or the Loan Participant, (D) Section 20(a) of the
Lease (but only in respect of any consent to assignment by the Lessee of
its rights or obligations under the Lease) and (E) any other provision of
the Lease if such amendment, modification, supplement or waiver would
impose any additional affirmative obligations upon the Owner Trustee or the
Owner Participant, provided, however, that the provisions of clauses (2)(A)
-------- -------
and (2)(B) of this Section 5.09(e) shall not affect the right of the
Indenture Trustee to approve or consent to any matter or accept any
modified performance under the Lease without the consent of the Owner
Trustee or the Owner Participant, so long as such consent, approval or
acceptance does not purport to bind the Owner Trustee vis-a-vis the Lessee
or purport to constitute, as between the Owner Trustee and the Lessee, a
waiver of the rights of the Owner Trustee under the Lease or an amendment
or modification of the obligations of the Lessee under the Lease;
(f) the Owner Trustee shall have the non-exclusive right, as
Lessor, to seek specific performance of the covenants of the Lessee under
the Lease relating to the protection, insurance, maintenance, possession
and use of the Aircraft; and
(g) so long as no Specified Indenture Default or Indenture Event
of Default shall have occurred and be continuing, the right, together with
the Indenture Trustee, to exercise all other rights, powers, privileges and
remedies under any Indenture Document (other than the Lease (other than
relating to Excluded Payments)) or consent to or approve any other matter
referred to in any Indenture Document (other than the Lease (other than
relating to Excluded Payments)) as requiring or being subject to the
consent or approval of the Owner Trustee.
Upon consummation of a foreclosure of the Lien and security interest of the
Indenture on the Indenture Estate, all rights of the Owner Trustee or the Owner
Participant (as the case may be) under this Section 5.09 shall terminate, except
insofar as such rights relate to Excluded Payments. Notwithstanding the
foregoing, and subject to the provisions of Sections 4.03 and 4.04(a), the
Indenture Trustee shall at all times have the right, to the exclusion of the
Owner Trustee and the Owner Participant to exercise the remedies set forth in
Section 17 of the Lease (other than in connection with Excluded Payments) and in
Article IV hereof.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01 Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture and agrees to receive and
disburse all monies constituting part of the Indenture Estate in accordance with
the terms hereof. The Trust Company and the Indenture Trustee, in their
38
individual capacities, shall not be answerable or accountable under any
circumstances, except (a) for their own willful misconduct or gross negligence,
(b) in the case of the Indenture Trustee, as provided in the second sentence of
Section 2.04 or the last sentence of Section 5.04, (c) negligence in the
handling or distribution of funds and (d) for liabilities that may result, in
the case of the Trust Company, from the inaccuracy or non-performance of any
representation or warranty or covenant of the Trust Company expressly made in
its individual capacity in the Participation Agreement or any other Operative
Agreement or in Section 6.03 or, in the case of the Indenture Trustee, from the
inaccuracy of any representation or warranty or breach of any covenant of the
Indenture Trustee made in its individual capacity in the Participation Agreement
or any other Operative Agreement. None of the Owner Participant, the Trust
Company or the Indenture Trustee shall be liable for any action or inaction of
any other.
SECTION 6.02. Absence of Duties. In the case of the Indenture
-----------------
Trustee, except in accordance with written instructions furnished pursuant to
Section 5.01 or 5.02, and except as provided in, and without limiting the
generality of, Sections 5.03 and 5.04 and, in the case of the Owner Trustee,
except as provided in Section 4.01, the Indenture Trustee and the Owner Trustee
shall have no duty (i) to see to any registration of the Aircraft or any
recording or filing of the Lease or of this Indenture or any other document, or
to see to the maintenance of any such registration, recording or filing, (ii) to
see to any insurance, whether or not the Lessee shall be in default with respect
thereto, (iii) to see to the payment or discharge of any Lien of any kind
against any part of the Trust Estate or the Indenture Estate, (iv) to confirm,
verify or inquire into the failure to receive any financial statements of the
Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to
the performance or observance of any of the Lessee's covenants under the Lease
with respect to the Aircraft. Except as expressly otherwise herein and in the
Participation Agreement provided, the Noteholders and the Owner Participant
shall not have any duty or responsibility hereunder or thereunder, including,
without limitation, any of the duties mentioned in clauses (i) through (v)
above.
SECTION 6.03. No Representations or Warranties as to Aircraft or
--------------------------------------------------
Documents. NONE OF THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR THE TRUST COMPANY
---------
MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY,
CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY
PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART
THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR
ANY PART THEREOF WHATSOEVER, except that the Trust Company in its individual
capacity warrants that on the Delivery Date (i) the Owner Trustee shall have
received whatever title was conveyed to it on the Delivery Date, and (ii) the
Aircraft shall be free
39
and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust
Company nor the Indenture Trustee in its individual capacity makes or shall be
deemed to have made any representation or warranty as to the validity, legality
or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or
any Indenture Document or as to the correctness of any statement contained in
any thereof, except for the representations and warranties of the Trust Company
and the Indenture Trustee made in their respective individual capacities under
this Indenture or in the Participation Agreement or in the Trust Agreement. The
Noteholders and the Owner Participant make no representation or warranty
hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest. Any monies paid
-------------------------------------
to or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to any Noteholder, the Lessee or the Owner
Trustee as provided in Article III need not be segregated in any manner except
to the extent required by law, and may be deposited under such general
conditions as may be prescribed by law, and the Indenture Trustee shall not
(except as otherwise provided in Section 3.07) be liable for any interest
thereon; provided that any payments received or applied hereunder by the
--------
Indenture Trustee shall be accounted for by the Indenture Trustee so that any
portion thereof paid or applied pursuant hereto shall be identifiable as to the
source thereof.
SECTION 6.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trustee nor the Indenture Trustee shall incur liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the
Board of Directors of any party to the Participation Agreement, certified by the
Secretary or an Assistant Secretary or other Responsible Officer thereof as duly
adopted and in full force and effect, as conclusive evidence that such
resolution has been duly adopted and that the same is in full force and effect.
As to the aggregate unpaid principal amount of Equipment Notes outstanding as of
any date, the Owner Trustee may for all purposes hereof rely on a certificate
signed by any Vice President or other authorized corporate trust officer of the
Indenture Trustee. As to any fact or matter relating to the Lessee the manner of
ascertainment of which is not specifically described herein, the Owner Trustee
and the Indenture Trustee may for all purposes hereof rely on a certificate,
signed by a duly authorized officer of the Lessee, as to such fact or matter,
and such certificate shall constitute full protection to the Owner Trustee and
the Indenture Trustee for any action taken or omitted to be taken by them in
good faith in reliance thereon. The Indenture Trustee shall assume, and shall be
fully protected in assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Indenture and to take all action to be taken by it
pursuant to the provisions hereof, and shall not inquire into the authorization
of the Owner Trustee with respect thereto. In the administration of the trusts
hereunder, the Owner Trustee and the Indenture Trustee each may execute any of
the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys and may, at the expense of the Indenture Estate,
advise with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not
40
be liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting. Each of the Owner Trustee and
------------------------
the Indenture Trustee acts hereunder solely as trustee herein, and, in the case
of the Owner Trustee, as provided in the Trust Agreement, and not in its
individual capacity, except as otherwise expressly provided in the Operative
Agreements.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
------------
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim on the Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by the Lessee or others, as required under the
Indenture Documents, and shall have the right to use or apply any monies held by
it hereunder in the Indenture Estate toward such payments. The Indenture Trustee
agrees that it shall have no right against the Noteholders or (except as
provided in the Participation Agreement) the Owner Participant for any fee as
compensation for its services as trustee under this Indenture.
SECTION 6.08. May Become Noteholder. Each of the institutions acting
---------------------
as Owner Trustee and Indenture Trustee hereunder may become a Noteholder and
have all rights and benefits of a Noteholder to the same extent as if it were
not the institution acting as Owner Trustee or Indenture Trustee, as the case
may be.
SECTION 6.09. Further Assurances; Financing Statements. At any time
----------------------------------------
and from time to time, upon the request of the Indenture Trustee, the Owner
Trustee shall promptly and duly execute and deliver any and all such further
instruments and documents as may be specified in such request and as are
necessary or desirable to perfect, preserve or protect the mortgage, security
interests and assignments created or intended to be created hereby, or to obtain
for the Indenture Trustee the full benefit of the specific rights and powers
herein granted, including, without limitation, the execution and delivery of
Uniform Commercial Code financing statements and continuation statements with
respect thereto, or similar instruments relating to the perfection of the
mortgage, security interests or assignments created or intended to be created
hereby.
SECTION 6.10. Assumption of Equipment Notes upon Purchase of
----------------------------------------------
Aircraft. In the event that the Lessee elects to purchase the Aircraft pursuant
--------
to Section 13(b)(ii) of the Lease and in connection therewith shall exercise its
right under Section 5.10 of the Participation Agreement to make such purchase,
in part, by assuming the obligations of the Owner Trustee under the Equipment
Notes, then upon satisfaction of all of the requirements of Section 5.10 of the
Participation Agreement (including the amendment of this Indenture), the rights
and obligations of the Owner Trustee under this Indenture shall be assumed by
the Lessee and, as of the time of such assumption, the Owner Trustee shall be
discharged therefrom (without affecting any liability of the Owner Trustee or
the Trust Company in respect of any obligation of the Owner Trustee or the Trust
Company arising out of or relating to the time before such assumption).
41
ARTICLE VII
SUCCESSOR TRUSTEES; SEPARATE TRUSTEES
SECTION 7.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Owner Trustee pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee and to each Noteholder.
SECTION 7.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at any
---------
time without cause by giving at least thirty (30) calendar days, prior written
notice to the Owner Participant, the Lessee, the Owner Trustee and each
Noteholder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Noteholders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Participant, the Owner
Trustee, the Lessee and the Indenture Trustee, and the Owner Trustee shall
promptly notify each Noteholder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a majority in
Interest of Noteholders may appoint a successor Indenture Trustee by an
instrument signed by such Noteholders. If a successor Indenture Trustee shall
not have been appointed within thirty (30) calendar days after such notice of
resignation or removal, the Indenture Trustee, the Owner Trustee or any
Noteholder may apply to any court of competent jurisdiction to appoint a
successor Indenture Trustee to act until such time, if any, as a successor shall
have been appointed as above provided. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Indenture Trustee appointed as above provided within one year
from the date of the appointment by such court.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee and to the predecessor Indenture Trustee an
instrument accepting such appointment, and thereupon such successor Indenture
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; provided that the rights of the
--------
predecessor Indenture Trustee to any compensation or indemnity relating to the
period prior to such transfer shall survive such transfer and the predecessor
Indenture Trustee shall retain any Lien which it may have on the Indenture
Estate securing such amounts; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder, provided that such predecessor
--------
Indenture Trustee shall be entitled to deduct from any monies held by it
42
constituting part of the Indenture Estate all compensation and indemnity then
due to it. Upon the successor Indenture Trustee accepting such appointment, the
predecessor Indenture Trustee shall be relieved of any further obligation and
liability hereunder and under the other Operative Agreements arising after the
time of such transfer.
(c) Any successor Indenture Trustee, however appointed, shall be a
Citizen of the United States and shall also be a bank or trust company having a
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee (including this account) may be
transferred, shall, subject to the terms of paragraph (c) of this Section, be
the Indenture Trustee under this Indenture without further act.
SECTION 7.03. Appointment of Separate Trustees. (a) At any time or
--------------------------------
times, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Indenture Estate may at the time be located or in which
any action of the Indenture Trustee may be required to be performed or taken or
if the Indenture Trustee shall be advised by counsel satisfactory to it that it
is so necessary or prudent in the interests of the Noteholders, or in the event
the Indenture Trustee shall have been requested to do so by a Majority in
Interest of Noteholders, the Indenture Trustee, by an instrument in writing
signed by it, and without the concurrence of the Owner Trustee, may appoint one
or more individuals or corporations to act as separate trustee or separate
trustees or co-trustee, acting jointly with the Indenture Trustee, or to act as
separate trustee or trustees of all or any part of the Indenture Estate with
such powers as may be provided in an agreement supplemental hereto.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee and the Owner Trustee hereby makes,
constitutes and appoints the Indenture Trustee its agent and attorney- in- fact
for it and in its name, place and stead to execute, acknowledge and deliver the
same in the event that the Owner Trustee shall not itself execute and deliver
the same within twenty days after receipt by it of such request so to do. Upon
the acceptance in writing of such appointment by any such separate trustee or
separate trustees or co-trustee, it or they shall be vested with such title to
the Indenture Estate or any part thereof, and with such rights and duties, as
shall be specified in the instrument of appointment, jointly with the Indenture
Trustee (except insofar as local law makes it necessary for any such separate
trustee or separate trustees or co-trustee to act alone) subject to all the
terms of this Indenture. Any separate trustee or separate trustees or co-trustee
may, at any time by an instrument in writing, constitute the Indenture Trustee
its attorney-in-fact and
43
agent with full power and authority to do all acts and things and to exercise
all discretion on its behalf and in its name. In case any such separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, the
title to the Indenture Estate and all assets, property, rights, powers, trusts,
obligations and duties of such separate trustee or co-trustee shall, so far as
permitted by law, vest in and be exercised by the Indenture Trustee, without the
appointment of a successor to such separate trustee or co-trustee unless and
until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustee shall extend to and apply to each separate trustee or
co-trustee appointed pursuant to the foregoing provisions of this Section 7.03.
(d) Every separate trustee and co-trustee hereunder shall, to the
extent permitted by law, be appointed and act and the Indenture Trustee shall
act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of monies shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and such
separate trustee or separate trustees or co-trustee jointly except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Indenture Estate in any such jurisdiction)
shall be exercised and performed by such separate trustee or separate
trustees or co-trustee;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such separate trustee or
separate trustees or co-trustee shall be exercised hereunder by such
Person except jointly with, or with the consent of, the Indenture
Trustee; and
(iv) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, or take any such action or shall be
advised by such counsel that it is no longer legally required or necessary or
prudent in the interest of the Noteholders or in the event the Indenture Trustee
shall have been requested to do so by a Majority in Interest of Noteholders, the
Indenture Trustee shall execute and deliver an indenture supplement hereto and
all other instruments and agreements necessary or proper to remove any separate
trustee or separate trustees or co-trustee.
44
(e) Any request, approval or consent in writing by the Indenture
Trustee to any separate trustee or separate trustees or co-trustee shall be
sufficient warrant to such separate trustee or separate trustees or co-trustee,
as the case may be, to take such action as may be so requested, approved or
consented to.
(f) Notwithstanding any other provision of this Section 7.03, the
powers of any separate trustee or separate trustees or co-trustee appointed
pursuant to this Section 7.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
ARTICLE VIII
SUPPLEMENTS AND AMENDMENTS TO
THIS INDENTURE AND OTHER DOCUMENTS
SECTION 8.01. Instructions of Majority; Limitations. At any time and
-------------------------------------
from time to time but subject to the terms and provisions of this Indenture, (i)
the Owner Trustee (but only on the written request of the Owner Participant) and
the Indenture Trustee (but only on the written request of a Majority in Interest
of Noteholders) shall execute a supplement hereto for the purpose of adding
provisions to, or changing or eliminating provisions of, this Indenture as
specified in such request, and (ii) the Owner Trustee may (but only with the
written consent of the Owner Participant and on the written request of a
Majority in Interest of Noteholders) enter into such written amendment of or
supplement to the Lease or any other Indenture Document to which it is party as
may be specified in such request; provided, however, that, without the consent
-------- -------
of each Noteholder, no such amendment of or supplement to any such document, or
waiver or modification of the terms of any thereof, shall (i) modify any of the
provisions of this Section 8.01 or the definitions of the terms "Default",
-------
"Event of Default", "Excluded Payments", "Indenture Default", "Indenture Event
---------------- ----------------- ----------------- ---------------
of Default", "Lessor's Cost", "Majority in Interest of Noteholders" or
---------- ------------- -----------------------------------
"Operative Agreements", contained herein or in any other Operative Agreement
--------------------
(except to change default definitions by providing for additional events of
default), (ii) increase the principal amount of any Equipment Note or reduce the
amount or extend the time of payment of any amount owing or payable under any
Equipment Note or (except as provided in this Indenture) increase or reduce the
Make-Whole Amount or interest payable on any Equipment Note (except that only
the consent of the applicable Noteholder shall be required for any decrease in
any amounts of or the rate of Make-Whole Amount or interest payable on Equipment
Note or any extension for the time of payment of any amount payable under such
Equipment Note), or alter or modify the provisions of Article III with respect
to the order of priorities in which distributions thereunder shall be made or
with respect to the amount or time of payment of any such distribution, (iii)
reduce, modify or amend any indemnities in favor of any Noteholder or in favor
of or to be paid by the Owner Participant or alter the definition of
"Indemnitee" to exclude any Noteholder (except as consented to by each Person
----------
adversely affected thereby), (iv) modify or amend Section 3(f) of the Lease or,
except as expressly contemplated by any provision of the Lease, reduce the
amount or extend the time of payment of Basic Rent or Termination Value (or
other amounts payable therewith) for the Aircraft as set forth
45
in the Lease (except to the extent required to match any action consented to by
any Noteholder referred to in the parenthetical phrase in clause (ii) above), or
(v) modify, amend or supplement the Lease or consent to any assignment of the
Lease, in either case releasing the Lessee from its obligations in respect of
the payment of Basic Rent (except as above provided) or Termination Value (or
other amounts payable therewith) for the Aircraft or altering the absolute and
unconditional character of such obligations as set forth in Section 3(g) of the
Lease or change any of the circumstances under which Termination Value (or other
amounts payable therewith) are payable. This Section 8.01 shall not apply to any
indenture or indentures supplemental hereto permitted by, and complying with the
terms of, Section 5.07, Section 7.03 or Section 8.04. Notwithstanding the
foregoing, without the consent of each Noteholder, no such supplement to this
Indenture, or waiver or modification of the terms hereof or of any other
agreement or document shall expressly permit the creation of any Lien on the
Indenture Estate or any part thereof, except as expressly permitted herein or in
the Participation Agreement or the Lease, or deprive any Noteholder of the
benefit of the Lien of this Indenture on the Indenture Estate, except as
provided in Sections 5.01 and 5.02 or in connection with the exercise of
remedies under Article IV.
SECTION 8.02. Trustees Protected. If, in the opinion of the
------------------
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as the Indenture Trustee hereunder any document required to be executed
pursuant to the terms of Section 8.01 affects any right, duty, immunity or
indemnity with respect to it under this Indenture, the Indenture Trustee and the
Owner Trustee may in their discretion decline to execute such document.
SECTION 8.03. Documents Mailed to Noteholders. Promptly after the
-------------------------------
execution by the Owner Trustee or the Indenture Trustee of any document entered
into pursuant to Section 8.01, the Owner Trustee shall mail, by certified mail,
postage prepaid, a conformed copy thereof to the Indenture Trustee and the
Indenture Trustee shall mail, by certified mail, postage prepaid, a conformed
copy thereof to each Noteholder at its address shown on the Register, but the
failure of the Owner Trustee or Indenture Trustee, as the case may be, to mail
such conformed copies shall not impair or affect the validity of such document.
SECTION 8.04. No Request Necessary for Lease Supplement or Indenture
------------------------------------------------------
Supplement. Notwithstanding anything contained in Section 8.01, no written
----------
request or consent of the Indenture Trustee, any Noteholder or the Owner
Participant pursuant to Section 8.01 shall be required to enable the Owner
Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms
of the Lease to subject the Aircraft or other property thereto or to confirm a
Rent adjustment in accordance with Section 3(d) thereof or to execute and
deliver an Indenture Supplement to subject the Aircraft or other property hereto
pursuant to the terms hereof.
46
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Termination of Indenture. Upon (or at any time after)
------------------------
payment in full of the principal of and interest on and Make-Whole Amount, if
any, and all other Secured Obligations due under, or otherwise due to the
holders of, all Equipment Notes and provided that there shall then be no other
Secured Obligations due to the Noteholders and the Indenture Trustee hereunder
or under the Participation Agreement or the other Operative Agreements or
otherwise secured hereby, the Owner Trustee shall direct the Indenture Trustee
to execute and deliver to or as directed in writing by the Owner Trustee an
appropriate instrument releasing the Aircraft from the Lien of this Indenture
and releasing the Indenture Documents from the assignment and pledge thereof
hereunder, and the Indenture Trustee shall execute and deliver such instrument
as aforesaid and, at the Owner Trustee's expense, will execute and deliver such
other instruments or documents as may be reasonably requested by the Owner
Participant to give effect to such release; provided, however, that this
-------- -------
Indenture and the trusts created hereby shall earlier terminate and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Indenture Estate and the final distribution by the Indenture Trustee of all
monies or other property or proceeds constituting part of the Indenture Estate
in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Indenture and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof.
SECTION 9.02. No Legal Title to Indenture Estate in Noteholders. No
-------------------------------------------------
Noteholder shall have legal title to any part of the Indenture Estate. No
transfer, by operation of law or otherwise, of any Equipment Note or other
right, title and interest of any Noteholder in and to the Indenture Estate or
hereunder shall operate to terminate this Indenture or entitle such Noteholder
or any successor or transferee of such holder to an accounting or to the
transfer to it of legal title to any part of the Indenture Estate.
SECTION 9.03. Sale of Aircraft by Indenture Trustee is Binding. Any
------------------------------------------------
sale or other conveyance of any Aircraft by the Indenture Trustee made pursuant
to the terms of this Indenture or of the Lease shall bind the Noteholders and
shall be effective to transfer or convey all right, title and interest of the
Indenture Trustee, the Owner Trustee, the Owner Participant and the Noteholders
in and to such Aircraft. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
sale or conveyance or as to the application of any sale or other proceeds with
respect thereto by the Indenture Trustee.
SECTION 9.04. Indenture for Benefit of Owner Trustee, Indenture
-------------------------------------------------
Trustee, Owner Participant and Noteholders. Nothing in this Indenture, whether
------------------------------------------
express or implied, shall be construed to give to any person other than the
Trust Company, the Owner Trustee, the Indenture Trustee (in its individual and
trust capacities), the Owner Participant, the Lessee and the Noteholders any
legal or equitable right, remedy or claim under or in respect of this Indenture.
47
SECTION 9.05. No Action Contrary to Lessee's Rights under the Lease.
-----------------------------------------------------
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action in violation of the Lessee's rights under the Lease, including the right
to possession and use of the Aircraft in accordance with the terms of the Lease.
SECTION 9.06. Notices. Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing and
delivered in the manner and at the address provided in Section 12.01 of the
Participation Agreement.
SECTION 9.07. Severability. Any provision of this Indenture which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.08. No Oral Modifications or Continuing Waivers. No terms or
-------------------------------------------
provisions of this Indenture or the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or other Person against whom enforcement of the change, waiver,
discharge or termination is sought and any other party or other Person whose
consent is required pursuant to this Indenture; and any waiver of the terms
hereof or of any Equipment Note shall be effective only in the specific instance
and for the specific purpose given.
SECTION 9.09. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
Any request, notice, direction, consent, waiver or other instrument or action by
any Noteholder shall bind the successors and assigns of such Noteholder. This
Indenture and the Indenture Estate shall not be affected by any amendment or
supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Indenture to
the Trust Agreement shall mean the Trust Agreement as amended and supplemented
from time to time to the extent permitted hereby and thereby and by the
Participation Agreement.
SECTION 9.10. Headings. The headings of the various Articles and
--------
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 9.11 Governing Law. THIS INDENTURE SHALL IN ALL RESPECTS BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
48
VALIDITY AND PERFORMANCE. THIS INDENTURE IS BEING DELIVERED IN THE STATE OF NEW
YORK.
SECTION 9.12. Counterpart Form. This Indenture may be executed by the
----------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.13. Waiver of Jury Trial. EACH OF THE OWNER TRUSTEE AND THE
--------------------
INDENTURE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 9.14. Submission to Jurisdiction. Each of the Owner Trustee
--------------------------
and the Indenture Trustee agrees that any legal action or proceeding with
respect to this Indenture or any of the transactions contemplated hereby, or to
enforce any judgment obtained against it in respect of any of the foregoing (a
certified or exemplified copy of which judgment shall be conclusive evidence of
the fact and of the amount of any indebtedness therein described), may be
brought in the courts of the State of New York in the City and County of New
York and of the United States for the Southern District of New York and by the
execution and delivery of this Indenture, each such Person irrevocably consents
and submits to the nonexclusive jurisdiction of each such court, acknowledges
its competence and irrevocably agrees to be bound by a final judgment of such
court. Each such Person irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Each of the Owner Trustee and the Indenture Trustee hereby generally
consents to service of process to the respective addresses set forth in Section
12.01 of the Participation Agreement in the manner specified in such Section
12.01 of the Participation Agreement. Nothing in this paragraph shall affect the
right of any party hereto or their successors or assigns to bring any action or
proceeding against any other party hereto or their property in the courts of
other jurisdictions.
SECTION 9.15. Payment in Dollars.
------------------
(i) If, for the purposes of obtaining judgment in, or enforcing the
judgment of, any court, it is necessary for any Person to convert a sum due
hereunder in Dollars into another currency (the "Judgment Currency"), the
-----------------
rate of exchange used shall be that at which in accordance with normal
banking procedures such Person could purchase Dollars with the Judgment
Currency on the Business Day preceding that on which final judgment is
given or the order of enforcement made.
(ii) The obligation of the Owner Trustee in respect of any sum due
from it to any Person hereunder shall, notwithstanding any judgment or
order of enforcement in such Judgment Currency, be discharged only to the
extent that on the Business Day following
49
that on which final judgment is given or the order of enforcement made,
such Person may in accordance with normal banking procedures purchase
Dollars with the Judgment Currency; if the Dollars so purchased are less
than the sum originally due to such Person in Dollars, the Owner Trustee
agrees, as a separate obligation and notwithstanding any such judgment or
order of enforcement, to indemnify such Person against such loss
attributable to any of its obligations hereunder, and if the Dollars so
purchased exceed the sum originally due from the Owner Trustee, in Dollars,
such Person shall remit to the Owner Trustee such excess. Any additional
amount due from the Owner Trustee under this Section 9.15 will be due as a
separate debt and shall not be affected by judgment or order of enforcement
being obtained for any other sums due under or in respect of this Indenture
or any other Operative Agreement.
50
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written, and this Indenture having become effective
only upon such execution and delivery.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity, except as
otherwise expressly provided in the Operative
Agreements, but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
ALLFIRST BANK, not in its individual capacity,
except as expressly provided herein, but solely as
Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
51
APPENDIX A
DEFINITIONS [N583ML]
GENERAL PROVISIONS
The following terms shall have the following meanings for all purposes
of the Operative Agreements (as defined below), unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the case
of any conflict between the provisions of this Appendix and the provisions of
any Operative Agreement, the provisions of such Operative Agreement shall
control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and any agreement, instrument or document entered into in substitution or
replacement therefor, and (ii) references to parties to agreements shall be
deemed to include the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and
-------------------
trust capacities), the Owner Participant, the Indenture Trustee (in its
individual and trust capacities) and each of the Noteholders and each of the
respective successors and permitted assigns and respective directors, officers
and employees of the foregoing.
"Aeronautical Authority" means as of any time of determination, the
----------------------
FAA or other governmental airworthiness authority having jurisdiction over the
Aircraft or the Airframe and Engines or engines attached thereto under the laws
of the country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling 50% or more of any class of voting securities
of such Person or otherwise controlling, controlled by or under common control
with such Person. For the purposes of this definition, "control" (including
"controlled by" and "under common control with") shall mean the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether through the ownership of voting securities or by contract
or otherwise.
"After Tax Basis" means a basis such that any payment to be received
---------------
or accrued or deemed to be received by a Person shall be supplemented by a
further payment or payments to such Person so that the sum of such payments,
after deduction of the net amount of all Taxes (taking into account any related
credits or deductions) actually payable to any taxing authority resulting from
the actual or constructive receipt or accrual of such payments, shall be equal
to the payment to be received.
"Aircraft" means the Airframe together with the two Engines, whether
--------
or not any of the Engines may at the time of determination be installed on the
Airframe or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Model CL-600-2B19
--------
Series 200ER aircraft (excluding the Engines and any other engines which may
from time to time be installed thereon, but including any and all Parts which
may from time to time be incorporated in, installed on or attached to such
aircraft, and including any and all such Parts removed therefrom so long as
title to such removed Parts remains vested in the Lessor under the terms of
Section 7 of the Lease) originally delivered and leased under the Lease,
identified by national registration number and manufacturer's serial number in
the Lease Supplement executed and delivered on the Delivery Date, so long as a
Replacement Airframe shall not have been substituted therefor pursuant to
Section 8 of the Lease, and (ii) a Replacement Airframe, so long as another
Replacement Airframe shall not have been substituted therefor pursuant to
Section 8 of the Lease.
"Allfirst" means Allfirst Bank, a Maryland state-chartered commercial
--------
bank, and its successors and permitted assigns.
"Applicable Law" means all applicable laws, statutes, treaties, rules,
--------------
codes, ordinances, regulations, certificates, orders, interpretations, licenses
and permits of any Governmental Authority of competent jurisdiction and
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other administrative, judicial or quasi-judicial tribunal or
agency of competent jurisdiction.
"Applicable Rate" has the meaning specified in Exhibit B to the
---------------
Lease.
"Average Life Date" means, for any Equipment Note, the date which
-----------------
follows the prepayment date by a period equal to the Remaining Weighted Average
Life of such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as
---------------
amended, and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates
----------
throughout the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease
and rent payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading
-----------------------
"Basic Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day
----------
on the Delivery Date and ending at end of the day on the Expiration Date, or
such earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant
-------------------
under the Trust Agreement.
"Bills of Sale" means the FAA ▇▇▇▇ of Sale and the Warranty ▇▇▇▇ of
-------------
Sale.
"Business Day" means any day other than a Saturday or Sunday or other
------------
day on which commercial banks are authorized or required by law to close in New
York City, Morrisville, North Carolina (or in the event the Lessee changes the
location of its chief executive offices to a location other than Morrisville,
North Carolina such other location), Baltimore, Maryland (or in the event the
Indenture Trustee administers its corporate business in a location other than
Baltimore, Maryland such other location), and after the Lien of the Indenture is
discharged, Wilmington, Delaware.
"Citizen of the United States" means a citizen of the United States as
----------------------------
defined in (S)40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Code" means the United States Federal Internal Revenue Code of 1986,
----
as amended from time to time, or any similar legislation of the United States
enacted to supersede, amend, or supplement such Code (and any reference to a
provision of the Code shall refer to any successor provision(s), however
designated).
"Commitment" of a Loan Participant shall have the meaning given such
----------
term in Section 2.01(d) of the Participation Agreement; "Commitment" of the
----------
Owner Participant shall have the meaning given such term in Section 2.01(c) of
the Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of
------------
the Lease.
"Designated Maturity" means, with respect to any determination of a
-------------------
Treasury Rate, the maturity of the United States Treasury Notes designated
pursuant to the definition of "Make-Whole Amount" as being those to be used in
the calculation of such Treasury Rate.
"Default" means any event or condition which, with the lapse of time
-------
or the giving of notice, or both, would constitute an Event of Default.
"Deficiency Agreement" has the meaning given to such term in the
--------------------
recitals of the Participation Agreement.
"Deficiency Obligor" has the meaning given to such term in the
------------------
recitals of the Participation Agreement.
"Delivery Date" means the date on which the Aircraft is delivered and
-------------
sold to the Lessor and leased by the Lessor to the Lessee under the Lease, which
date shall be the date of the initial Lease Supplement.
"Dollars", "Dollar" and "$" means the lawful currency of the United
------- ------ -
States of America.
"DOT" means the United States Department of Transportation and any
---
agency or instrumentality of the United States Government succeeding to its
functions.
"EBO Date" has the meaning given to such term in Exhibit B to the
--------
Lease.
"EBO Amount" has the meaning given to such term in Exhibit B to the
----------
Lease.
"Engine" means (A) each of the two General Electric CF34-3B1 Series
------
200 engines originally delivered and leased under the Lease, identified by
manufacturer's serial number in the Lease Supplement executed and delivered on
the Delivery Date, so long as a Replacement Engine shall not have been
substituted therefor pursuant to Section 7(e) of the Lease, and (B) a
Replacement Engine, so long as another Replacement Engine shall not have been
substituted therefor pursuant to Section 7(e) of the Lease, whether or not such
engine or Replacement Engine, as the case may be, is from time to time installed
on the Airframe or installed on any other aircraft, and including in each case
all Parts incorporated or installed in or attached thereto and any and all Parts
removed therefrom so long as title to such Parts remains vested in the Lessor
under the terms of Section 7 of the Lease. The term "Engines" means, as of any
-------
date of determination, the two engines each of which is an Engine on that date.
"Engine Manufacturer" means General Electric Company, a New York
-------------------
corporation, and its successors and permitted assigns.
"Engine Manufacturer's Consent" means the Engine Manufacturer's
-----------------------------
Consent and Agreement [N583ML], dated as of August 10, 1999, from the Engine
Manufacturer.
"Engine Warranty Assignment" means the Engine Warranty Assignment
--------------------------
[N583ML], dated as of August 10, 1999, between Lessee and Owner Trustee.
"Equipment Notes" means the Equipment Notes issued by the Owner
---------------
Trustee pursuant to the Indenture and any equipment note issued in exchange
therefor or replacement thereof pursuant to the Indenture, each substantially in
the form set forth in Exhibit B to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
any regulations and rulings issued thereunder all as amended and in effect from
time to time.
"ERISA Plan" means, individually or collectively, an employee benefit
----------
plan, as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA
or any applicable regulation thereunder or a plan or individual retirement
account which is subject to Section 4975(c) of the Code;
"Event of Default" has the meaning given to such term in Section 16
----------------
of the Lease.
"Event of Loss" means any of the following events with respect to
-------------
the Aircraft, the Airframe or any Engine:
(i) any theft, hijacking or disappearance of such property for a
period of 30 consecutive days (provided that, so long as Lessee shall be
diligently pursuing recovery of such property, such period shall be
extended to 60 consecutive days) or more or, if earlier for a period that
extends until the end of the Term;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with respect
to such property on the basis of an actual, constructive or compromised
total loss;
(iv) with respect to the Airframe only, requisition of use of such
property by any foreign government or purported government or any agency or
instrumentality thereof (other than the Government), for a period in excess
of 180 consecutive days (for countries listed in Exhibit E to the Lease) or
30 consecutive days (for any other country) or such shorter period ending
on the expiration of the Term;
(v) with respect to the Airframe only, requisition of use of such
property by the Government for a period extending beyond the Term;
(vi) condemnation, confiscation or seizure of, or requisition of title
of such property by any foreign government or purported government or any
agency or instrumentality thereof or by the Government, for a period in
excess of 10 consecutive days or such shorter period ending on the
expiration of the Term;
(vii) as a result of any law, rule, regulation, order or other action
by the Aeronautical Authority, the use of the Aircraft for the
transportation of passengers or Airframe in the normal course of air
transportation shall have been prohibited by virtue of a condition
affecting all Canadair Regional Jet Series 200ER aircraft equipped with
engines of the same make and model as the Engines for a period of 180
consecutive days (or beyond the end of the Term), unless the Lessee, prior
to the expiration of such 180-day period, shall be diligently carrying
forward all necessary and desirable steps to permit normal use of the
Aircraft and shall within 12 months have conformed at least one Canadair
Regional Jet Series 200ER aircraft (but not necessarily the Aircraft) to
the requirements of any such law, rule, regulation, order or action, and
shall be diligently pursuing conformance of the Aircraft in a non-
discriminatory manner provided that, notwithstanding the foregoing, if such
normal use of such property subject to the Lease shall be prohibited at the
end of the Term, an Event of Loss shall be deemed to have occurred; and
(viii) with respect to an Engine only, the requisition or taking of
use thereof by any government, or instrumentality or agency thereof and any
divestiture of title or ownership deemed to be an Event of Loss with
respect to an Engine under Section 5(b)(iii) or 5(b)(vi) of the Lease.
The date of such Event of Loss shall be (aa) the 31st day following loss of such
property or its use due to theft or disappearance or the 61st day following such
loss if such period shall have been extended (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day (for countries listed in Exhibit E to the Lease)
or 31st day (for any other country) following requisition of use of such
property by a foreign government or other Governmental Authority referred to in
clause (iv) above, or the end of the Term if earlier than such 181st or 31st
day; (ee) the 11th day following condemnation, confiscation or seizure of, or
requisition of title of such property by a foreign government or other
Governmental Authority referred to in clause (vi) above or the Government or the
end of the Term if earlier than such 11th day; (ff) the last day of the Term in
the case of requisition of use of such property by the Government; and (gg) the
last day of the applicable period referred to in clause (vii) above (or if
earlier, the end of the Term). An Event of Loss with respect to the Aircraft
shall be deemed to have occurred if any Event of Loss occurs with respect to the
Airframe.
"Excluded Payments" means collectively, (i) indemnity, expense,
-----------------
reimbursement or other payments (including without limitation, Transaction
Costs) paid or payable by the Lessee in respect of the Owner Participant, the
Owner Trustee in its individual capacity or any of their respective successors,
permitted assigns, directors, officers, employees, servants and agents or
Affiliates (other than the Owner Trustee in its trust capacity), pursuant to the
Participation Agreement or any other Operative Agreement or any indemnity
hereafter granted to the Owner Participant or the Owner Trustee in its
individual capacity pursuant to the Lease or the Participation Agreement, (ii)
proceeds of public liability insurance (or government indemnities in lieu
thereof) in respect of the Aircraft payable as a result of insurance claims paid
for the benefit of, or losses suffered by, the Owner Trustee in its individual
capacity or by the Owner Participant, or their respective successors, permitted
assigns or Affiliates, (iii) proceeds of insurance maintained with respect to
the Aircraft by the Owner Participant or any Affiliate thereof (whether directly
or through the Owner Trustee) in accordance with Section 9(f) of the Lease, (iv)
payments by the Lessee in respect of any amounts payable under the Tax Indemnity
Agreement, (v) any purchase price paid to the Owner Participant for its interest
in the Trust Estate, (vi) any amounts paid or payable pursuant to the Deficiency
Agreement or the Residual Agreement, (vii) any payments in respect of interest
to the extent attributable to payments referred to in clauses (i) through (vi)
above, and (viii) any right to demand, collect or otherwise receive and enforce
the payment of any amount described in clauses (i) through (vii) above.
"Expenses" has the meaning given to such term in Section 7.01(a) of the
--------
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
---------------
executed and delivered on the Delivery Date.
"FAA ▇▇▇▇ of Sale" means (A) the ▇▇▇▇ of sale for the Airframe on AC Form
----------------
8050-2, or such other form as may be approved by the Aeronautical Authority,
executed by the Seller in favor of the Owner Trustee and to be dated the
Delivery Date, and (B) a ▇▇▇▇ of sale for a Replacement Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautical Authority,
executed by the seller thereof in favor of the Owner Trustee.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
------------------------ -----------------------
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within
30 days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease and that the Lessee has removed all
Parts which it is entitled to remove pursuant to Section 7 of the Lease and that
the Aircraft is not encumbered by the Lease. Except as otherwise expressly
provided in the Lease, all appraisal costs will be shared equally by the Lessor
and the Lessee; provided that if the Lessee elects not to renew the Lease or
--------
purchase the Aircraft following the conclusion of such appraisal, the Lessee
shall pay all appraisal costs. Notwithstanding the foregoing, for purposes of
Section 17 of the Lease, the "Fair Market Rental Value" or "Fair Market Sales
Value" of the Aircraft, the Airframe or any Engine, shall be determined on an
"as is, where is" basis and shall take into account customary brokerage and
other out-of-pocket fees and expenses which typically would be incurred in
connection with a re-lease or sale of the Aircraft, the Airframe or any Engine.
Any such determination pursuant to Section 17 of the Lease shall be made by a
recognized independent aircraft appraiser selected by Lessor and the costs and
expenses associated therewith shall be borne by Lessee, unless Lessor does not
obtain possession of the Aircraft, Airframe and Engines pursuant to Section 17
of the Lease, in which case an appraiser shall not be appointed and Fair Market
Rental Value and Fair Market Sales Value for purposes of Section 17 of the Lease
shall be zero.
"Fair Market Value Renewal Term" has the meaning given to such term in
------------------------------
Section 13(a) of the Lease.
"Federal Aviation Administration" or "FAA" means the United States Federal
-------------------------------- ---
Aviation Administration, the Administrator thereof and any agency or
instrumentality of the United States government succeeding to their functions.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a) of
------------------
the Lease.
"Government" means the United States of America or an agency or
----------
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Governmental Authority" means (a) any federal, state, county, provincial,
----------------------
municipal, foreign, international, regional or other governmental or regulatory
authority, agency, department, board, body, instrumentality, commission, court
or any political subdivision of any of the foregoing, and (b) each person who
shall, from time to time, be vested with the control and supervision of, or have
jurisdiction over, the registration, airworthiness, operation or other matters
relating to aviation including any competent airport authority, air traffic
control or navigation authority (including European Organization for the Safety
of Air Navigation (Eurocontrol) and the Federal Aviation Administration of the
United States of America or any person acting on its behalf).
"Indemnitee" means each of Trust Company, in its individual capacity and as
----------
Owner Trustee, the Owner Participant, the Indenture Trustee, in its individual
capacity and as trustee, the Loan Participant, each of the other Noteholders,
and each of their respective successors, transferees or assigns permitted under
the terms of the Operative Agreement, and each Affiliate, officer, director,
employee, agent, representative, servant and corporate shareholder of any of the
foregoing Persons.
"Indenture" means the Trust Indenture and Security Agreement [N583ML],
---------
dated as of August 10, 1999, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
-----------------
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
-------------------
the Indenture.
"Indenture Estate" means all estate, right, title and interest of the
----------------
Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excluded Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"Indenture Event of Default" means each of the events specified in Section
--------------------------
4.02 of the Indenture.
"Indenture Supplement" means (a) the Trust Indenture and Security Agreement
--------------------
Supplement No. 1, substantially in the form of Exhibit A to the Indenture, which
shall describe with particularity the Aircraft included in the property of the
Owner Trustee covered by the Indenture by reference to the Lease Supplement, and
which creates a first priority purchase money equipment security interest in the
Aircraft and (b) any other supplement to the Indenture from time to time
executed and delivered in accordance with the Indenture.
"Indenture Trustee" means Allfirst Bank, a Maryland state-chartered
-----------------
commercial bank, as indenture trustee under the Operative Agreements on behalf
of the Noteholders, and its successors and permitted assigns.
"Indenture Trustee's Liens" means any Lien against, on or with respect to
-------------------------
the Aircraft, any Engine, the Lessor's Estate or the Indenture Estate or any
part thereof resulting from (i) claims against the Indenture Trustee or any
Affiliate thereof not related to the administration of the Indenture Estate or
any transactions contemplated by the Operative Agreements, (ii) any act or
omission of the Indenture Trustee or any Affiliate thereof which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee or any Affiliate thereof in its individual capacity in
respect of which the Lessee has not indemnified (and is not obligated to
indemnify) the Indenture Trustee or any Affiliate thereof in such capacity.
"Lease" means the Lease Agreement [N583ML], dated as of August 10, 1999
-----
between the Lessor and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form of
----------------
Exhibit A to the Lease, entered into between the Lessor and the Lessee for the
purpose of leasing the Aircraft under and pursuant to the terms of the Lease,
including any amendment thereto entered into subsequent to the Delivery Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation, and its
------
successors and permitted assigns.
"Lessee Documents" means the Operative Agreements to which the Lessee is a
----------------
party.
"Lessor" means First Union Trust Company, National Association, a national
------
banking association, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, and its successors and permitted assigns.
"Lessor's Cost" has the meaning given to such term in Exhibit B of the
-------------
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
---------------
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity
Agreement) including, without limitation, all amounts of Rent, insurance
proceeds and requisition, indemnity or other payments of any kind, but
specifically excluding any Excluded Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
--------------
any Engine, the Lessor's Estate or the Indenture Estate or any part thereof,
title thereto or any interest therein arising as a result of (i) claims against
or affecting the Trust Company or the Owner Participant, in each case not
related to the Operative Agreements or the transactions contemplated thereby,
(ii) acts or omissions of the Trust Company or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Trust Company, Owner Participant, Lessor's
Estate or the trust created by the Trust Agreement which are not required to be
indemnified against by the Lessee pursuant to Articles 6 or 7 of the
Participation Agreement (other than due to the exclusions contained in Section
6.01(b)(x) or 7.01(b)(vii)) and which are not required to be indemnified against
by the Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against
the Trust Company or the Owner Participant arising from the transfer by the
Lessor or the Owner Participant of its interests in the Aircraft or any Engine
other than a transfer of the Aircraft or any other portion of the Lessor's
Estate pursuant to Section 5(b), 7(b), 7(c), 7(d), 7(e), 8, 12(b), 13(b), 14(a)
or 17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease or any other transfer required by
the Operative Agreements.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
----
exercise of rights, security interest, claim, including any right of ownership
or other similar interest of any nature whatsoever.
"Loan Participant" means and includes each registered holder from time to
----------------
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Note issued under the Indenture, Canadian Regional Aircraft
Finance Transaction No. 1 Limited, a Jersey, Channel Islands company, and its
successors and permitted assigns.
"Majority in Interest of Noteholders" means, as of a particular date of
-----------------------------------
determination, the Noteholders of more than 66 2/3% of the aggregate unpaid
principal amount of all Equipment Notes Outstanding as of such date (excluding
any Equipment Notes owned or held by Owner Trustee, Lessee or the Owner
Participant or any Affiliate of any such party or any interests of Owner Trustee
or the Owner Participant therein by reason of subrogation pursuant to Section
2.12 of the Indenture (unless all Equipment Notes Outstanding shall be held by
Owner Trustee, Lessee, the Owner Participant or any Affiliate thereof)).
"Make-Whole Amount" means, with respect to the prepayment or repayment of
-----------------
any Equipment Note, an amount equal to the excess, if any, of (i) the present
value, as of the date of the relevant prepayment or repayment of such Equipment
Note, of the respective installments of principal of and interest on such
Equipment Note that, but for such prepayment or repayment, would have been
payable on each Payment Date after such prepayment or repayment over (ii) the
principal amount of such Equipment Note then being prepaid or repaid. Such
present value shall be determined by discounting the amounts of such
installments from their respective Payment
Dates to the date of such prepaymentor repayment at a rate equal to the Treasury
Rate determined on the basis of a Designated Maturity equal to the then
Remaining Weighted Average Life of such Equipment Note plus 0.5% (or in the case
of any prepayment of such Equipment Note made within six months after the holder
of such Equipment Note has made demand for the payment of any Increased Cost or
of any amount pursuant to Article 6 of the Participation Agreement in respect of
withholding Taxes, the Treasury Rate determined on the basis of a Designated
Maturity equal to the then Remaining Weighted Average Life of such Equipment
Note plus 1.00%). Each holder of an Equipment Note will furnish to the Lessee
and the Indenture Trustee a certificate setting forth the calculation and amount
of the Make-Whole Amount with respect to its Equipment Note, which account shall
be conclusive absent manifest error.
"Manufacturer" means Bombardier Inc., a Canadian corporation, and its
------------
successors and permitted assigns.
"Material Adverse Change" means, with respect to any Person, any event,
-----------------------
condition or circumstance that materially and adversely affects such Person's
business or consolidated financial condition or its ability to perform its
obligations under the Operative Agreements.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
------------------------
to the Lease.
"Net Economic Return" means the Owner Participant's nominal after-tax book
-------------------
yield (utilizing the multiple investment sinking fund method of analysis),
aggregate net after-tax cash and periodic FASB 13 earnings (plus or minus 5%),
computed on the basis of the same methodology, constraints and assumptions as
were utilized by the initial Owner Participant in determining Basic Rent
percentages and Termination Value percentages as of the Delivery Date; provided,
--------
that, if the initial Owner Participant shall have transferred its interest, Net
Economic Return shall be calculated as if the initial Owner Participant had
retained its interest; provided, further, that, notwithstanding the preceding
-------- -------
proviso, solely for purposes of Article 13 of the Participation Agreement and
calculating any adjustments to Basic Rent percentages and Termination Values
percentages in connection with a refinancing pursuant to such Article 13 at a
time when the Owner Participant is a transferee (other than an Affiliate of the
initial Owner Participant), the after-tax yield (but not the after-tax cash)
component of Net Economic Return shall be calculated on the basis of the
methodology and assumptions utilized by the transferee Owner Participant as of
the date on which it acquired its interest.
"Non-U.S. Person" means any Person other than a U.S. Person.
---------------
"Noteholder" means and includes the Loan Participant and each subsequent
----------
registered holder from time to time of an Equipment Note issued under the
Indenture for so long as the Loan Participant or such subsequent holder shall
hold such Equipment Note.
"Noteholder Tax Indemnitee" means each Noteholder and all Affiliates,
-------------------------
directors, officers, agents, representatives, servants and corporate
shareholders thereof.
"Officer's Certificate" means as to any company a certificate signed by a
---------------------
Responsible Officer of such company.
"Operative Agreements" means the Participation Agreement, the Trust
--------------------
Agreement, the Deficiency Agreement, the Residual Agreement, the Return
Condition Agreement, the FAA ▇▇▇▇ of Sale, the Warranty ▇▇▇▇ of Sale, the
Purchase Agreement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the PAA Consent, the Engine Manufacturer's Consent, the Lease, each
Lease Supplement, any Owner Participant Guaranty, the Equipment Notes
outstanding at the time of reference, the Indenture, each Indenture Supplement
and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
------------------
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., or (iii) other
counsel designated by the Lessee and reasonably satisfactory to the Indenture
Trustee, and (b) for the Owner Trustee or the Indenture Trustee, an attorney
selected by such Person and reasonably satisfactory to the Lessee and, in the
case of the Owner Trustee, reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
-----------
date of determination, all Equipment Notes theretofore executed and delivered
under the Indenture, with the exception of the following:
1) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to the
Indenture or otherwise;
2) Equipment Notes for which prepayment money in the necessary amount has
been theretofore deposited with the Indenture Trustee in trust for the
holders of such Equipment Notes pursuant to Section 9.01 of the
Indenture; provided that if such Equipment Notes are to be prepaid,
-------- ----
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
3) Equipment Notes in exchange for or in lieu of which other Equipment
Notes have been executed and delivered pursuant to Article II of the
Indenture.
"Owner Participant" means Polaris Holding Company, a Delaware corporation,
-----------------
and its successors and permitted transferees and assigns.
"Owner Participant Guarantor" means the provider of an Owner Participant
---------------------------
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered or to be
--------------------------
delivered to support the obligations of the Owner Participant under the
Operative Agreements in connection with the transfer by the Owner Participant of
the Beneficial Interest.
"Owner Trustee" means the Trust Company, not in its individual capacity
-------------
except as otherwise expressly stated, but solely as trustee under the Trust
Agreement, and its successors and permitted assigns.
"PAA Consent" means the Aircraft Manufacturer's Consent and Agreement
-----------
[N583ML], dated as of August 10, 1999, from the Manufacturer.
"Participants" means, collectively, the Owner Participant and the Loan
------------
Participant; "Participant" means, individually, one of the Participants.
-----------
"Participation Agreement" means the Participation Agreement [N583ML], dated
-----------------------
as of August 10, 1999, among the Lessee, the Owner Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as owner
trustee, the Owner Participant, the Indenture Trustee and the Loan Participant.
"Parts" means any and all appliances, parts, instruments, components,
-----
appurtenances, accessories, furnishings, seats, and other equipment of whatever
nature (other than complete Engines or engines and temporary replacement parts
as provided in Section 8 of the Lease and cargo containers) which may from time
to time be incorporated or installed in or attached to any Airframe or any
Engine or which have been removed therefrom so long as title to such removed
Parts remains vested in Lessor under the terms of Section 7 of the Lease,
exclusive of any items leased by the Lessee from third parties and not required
to be installed on the Aircraft in accordance with the Lease or otherwise
required in the navigation or operation of the Aircraft.
"Past Due Rate" means a rate per annum equal to 2% plus the Applicable Rate
-------------
or, if the Equipment Notes have been paid in full, a rate per annum equal to the
TV Rate identified in Exhibit B to the Lease.
"Payment Date" means each June 1 and December 1 through and including June
------------
1, 2015, commencing on December 1, 1999.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
---------------------
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease except those that do not maintain normal diplomatic
relations with the United States and, with respect to both
clause (a) and (b) of this definition, which shall not then be subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws.
"Permitted Investments" means (a) direct obligations of the United States
---------------------
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of Allfirst Bank for which such bank or an affiliate is investment advisor or to
which such bank provides other services to such mutual fund and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a short-term debt rating of "A1" by Standard & Poor's or "P1" by ▇▇▇▇▇'▇
Investors Service, Inc. (or, if neither such organization shall provide such
ratings at any time, a rating equal to the highest ratings assigned by any
nationally recognized rating organization in the United States of America) and
having a final maturity of one year or less from date of purchase thereof; (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest short-term
debt rating assigned by such organization, or (f) obligations of the type
described in clauses (a) or (b) above, purchased from any bank, trust company,
or banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Indenture Trustee
(or after the Lien of the Indenture has been discharged, the Owner Trustee), all
such Permitted Investments shall mature not later than 30 days from the date of
purchase. If any of the above investments are unavailable, the entire amount to
be invested may be used to purchase Federal Funds overnight from an entity
described in (d) above.
"Permitted Lien" has the meaning given to such term in Section 10 of the
--------------
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier, (b) any airframe
-------------------
or engine manufacturer, or Affiliate of such a manufacturer, who is domiciled in
the United States of America or a country listed on Exhibit E to the Lease or
(c) the United States of America or any instrumentality or agency thereof.
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof) or other entity of
whatever nature.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
------------------
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Lessee
and the
Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement Assignment
-----------------------------
[N583ML], dated as of August 10, 1999, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
--------------
"Reasonable Basis" means that a realistic possibility of success, within
----------------
the meaning of ABA Formal Opinion No. 85-352, exists for pursuing such contest.
"Recovery Period" means "Tax Attribute Period" as defined in the Tax
---------------
Indemnity Agreement.
"Refinancing" has the meaning given to such term in Section 13.01 of the
-----------
Participation Agreement.
"Register" has the meaning given to such term in Section 2.07 of the
--------
Indenture.
"Registrar" has the meaning given to such term in Section 2.07 of the
---------
Indenture.
"Regulation D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
"Related Tax Indemnitee" means any Affiliate of any Tax Indemnitee.
----------------------
"Remaining Weighted Average Life" means on a given date with respect to any
-------------------------------
Equipment Note the number of days equal to the quotient obtained by dividing (i)
the sum of each of the products obtained by multiplying (a) the amount of each
then remaining scheduled payment of principal of such Equipment Note by (b) the
number of days from and including such date to but excluding the dates on which
each such payment of principal is scheduled to be made; by (ii) the then
outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
------------
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
----
"Rent Payment Date" means each Payment Date during the Term.
-----------------
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
--------------------
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
--------------------
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines
from time to time installed thereon) which shall have become subject to the
Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
------------------------
of the Lease.
"Replacement Engine" means a General Electric CF34-3B1 Series 200 engine
------------------
(or engine of the same manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe), which has a value, utility
and remaining useful life at least equal to, and which is in good operating
condition as, the Engine to be replaced thereby (assuming that such Engine being
replaced was in the condition required to be maintained in accordance with the
Lease), and which shall have become subject to the Lease pursuant to Section
7(e) thereof; provided that, such engine shall be compatible with the other
-------- ----
Engine, and shall be an engine of a type then being utilized by the Lessee on
other Canadair Regional Jet Series 200 aircraft operated by the Lessee.
"Residual Agreement" has the meaning given to such term in the recitals of
------------------
the Participation Agreement.
"Responsible Officer" means, with respect to the Owner Trustee or the
-------------------
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"Return Condition Agreement" means the Return Condition Agreement [N583ML],
--------------------------
dated as of August 10, 1999, between the Manufacturer and the Lessee.
"SEC" means the Securities and Exchange Commission of the United States and
---
any successor agencies or authorities.
"Section 1110" means 11 U.S.C. (S) 1110 or any successor or analogous
------------
section of the federal bankruptcy law in effect from time to time.
"Section 1110 Person" means a Citizen of the United States who is an air
-------------------
carrier holding a valid air carrier operating certificate issued pursuant to 49
U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
-------------------
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Seller" has the meaning given to such term in Exhibit B to the Lease.
------
"Security Trustee" means NatWest Aerospace Trust Company Limited, as
----------------
Security Trustee under the Deed of Charge, Assignment and Priorities dated April
20, 1998, among, inter alia, the initial Loan Participant, as at any time
amended, modified, novated or replaced by any corresponding agreement or
agreements (the "Deed of Charge"), or any other person acting as Security
Trustee under the Deed of Charge as from time to time designated in writing to
the Lessee.
"Specified Default" means (a) an event or condition described in Section
-----------------
16(a), (b), (f), (g), (h), (k) or (l) of the Lease that, after the giving of
notice or lapse of time, or both, would become an Event of Default, or (b) any
Event of Default.
"Specified Indenture Default" means (a) any Specified Default, or (b) any
---------------------------
Indenture Default arising under Sections 4.02(b), 4.02(c), 4.02(h) or 4.02(i) of
the Indenture.
"Specified Lease" means, at any time of determination, any lease under
---------------
which an aircraft is leased to the Lessee, if the Owner Participant or an
Affiliate of the Owner Participant, or a trustee for the benefit of the Owner
Participant or an Affiliate of the Owner Participant, shall be the lessor under
such lease.
"Sublease" means any sublease agreement between the Lessee and a Permitted
--------
Sublessee as permitted by Section 5(b) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities, indemnities and
-----------------
obligations which the Lessee assumes or agrees to perform or pay under the Lease
or under the Participation Agreement or Tax Indemnity Agreement or any other
Operative Agreement to the Lessor, the Owner Participant, the Indenture Trustee,
any Noteholder or others, including payments of Termination Value, EBO Amount,
and amounts calculated by reference to Termination Value, any amounts of Make-
Whole Amount payable under the Indenture to the extent provided in Section 3(c)
or Section 14 of the Lease, all other amounts payable under Section 3(c) of the
Lease, and all amounts required to be paid by Lessee under the agreements,
covenants, and indemnities contained in the Lease or in the Participation
Agreement or the Tax Indemnity Agreement or any other Operative Agreement, but
excluding Basic Rent, and (b) all amounts that the Owner Trustee is obligated to
pay in accordance with Section 2.14 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 6.01(a) of the
--- -----
Participation Agreement.
"Tax Indemnitee" means each Indemnitee.
--------------
"Tax Indemnity Agreement" means the Tax Indemnity Agreement [N583ML], dated
-----------------------
as of August 10, 1999 between the Lessee and the Owner Participant.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
----
"Termination Date" means each date listed in the column entitled
----------------
"Termination Date" in Exhibit D to the Lease or, during a Renewal Term or
otherwise during any period following the last day of the Term, the second day
of each month.
"Termination Value" means (a) as of any Termination Date during the Basic
-----------------
Term, the amount determined as set forth in Exhibit D to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
-----------------
8.01(a) of the Participation Agreement.
"Transportation Code" means Title 49 of the United States Code, subtitle
-------------------
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury Rate" means for any Designated Maturity, the average yield to
-------------
maturity of, and resulting from the bidding for, the most recently auctioned
United States Treasury Notes with maturities equal to such Designated Maturity
on the date three Business Days prior to the relevant calculation of Make-Whole
Amount; and if United States Treasury Notes with such a maturity are not then
auctioned and publicly traded, the weighted average yield to maturity of United
States Treasury Notes with maturities next above and below such Designated
Maturity (calculated as provided below); such yields in each case to be
determined by averaging (and rounding upward to the nearest whole multiple of
1/1000 of 1% per annum, if the average is not such a multiple) the yields of the
relevant United States Treasury Notes (rounded, if necessary, to the nearest
1/1000 of 1% with any figure of 1/2000 of 1% or above rounded upward) as
displayed on the applicable Telerate screen (page 7677), or if such screen is
not available, as quoted by two reputable dealers in United Stated Treasury
Notes selected by a Majority in Interest of Noteholders, in either case, at
approximately 11:00 a.m. New York time on the date, and notified to the Lessee,
the Indenture Trustee and the Noteholders; any weighted average yield of United
States Treasury Notes with two maturities is to be calculated in accordance with
the following formula:
(Y2-Y1)(DM-X1)
---------------
WAY=Y1+ (X2-X1)
Where:
WAY = Weighted Average Yield
DM = relevant Designated Maturity
X1 = whole integer in years closest to and less than DM which equals
the maturity of a United States Treasury Note then publicly
traded.
X2 = whole integer in years closest to and greater than DM which
equals the maturity of a United States Treasury Note then
publicly traded.
Y1 = yield, determined as provided above, of United States Treasury
Notes then most recently auctioned with maturities equal to X1.
Y2 = yield, determined as provided above, of United States Treasury
Notes then most recently auctioned with maturities equal to X2.
"Trust Agreement" means the Trust Agreement [N583ML], dated as of August
---------------
10, 1999, between the Owner Participant and the Trust Company.
"Trust Company" means First Union Trust Company, National Association, a
-------------
national banking association, and its successors and permitted assigns.
"Trust Estate" means the Lessor's Estate.
------------
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
-------------------
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
-----------------------
from time to time in any relevant jurisdiction.
"United States", "U.S." or "US" means the United States of America.
------------- ---- --
"U.S. Person" means a Person described in (S) 7701(a)(30) of the Code.
-----------
"Warranty ▇▇▇▇ of Sale" means (A) the full warranty ▇▇▇▇ of sale covering
---------------------
the Aircraft (and specifically referring to each Engine) executed by the Seller
in favor of the Owner Trustee and to be dated the Delivery Date, and (B) a full
warranty ▇▇▇▇ of sale covering a Replacement Aircraft (and specifically
referring to each Engine) executed by the seller thereof in favor of the Owner
Trustee.
EXHIBIT A
to Trust Indenture and Security Agreement
INDENTURE SUPPLEMENT
INDENTURE SUPPLEMENT No. ________ dated _____________________, 1999
(this "Indenture Supplement") of FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity except as expressly provided in the
Operative Agreements, but solely as Owner Trustee under the Trust Agreement (in
such capacity, herein called the "Owner Trustee").
-------------
W I T N E S S E T H
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement, which shall particularly describe the Aircraft and any
Replacement Airframe or Replacement Engine included in the property covered by
the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N583ML] dated as
of August 10, 1999 (herein called the "Indenture") between the Owner Trustee and
---------
Allfirst Bank, as Indenture Trustee (herein called the "Indenture Trustee"),
-----------------
provides for the execution and delivery of a supplement thereto substantially in
the form hereof which shall particularly describe the Aircraft (such term and
other defined terms in the Indenture being herein used with the same meanings)
and any Replacement Airframe or Replacement Engine included in the Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS*, the Indenture relates to the Airframe and Engines
described below and a counterpart of the Indenture is attached hereto and made a
part hereof and this Indenture Supplement, together with such counterpart of the
Indenture, is being filed for recordation on the date hereof with the Federal
Aviation Administration as one document.
WHEREAS** the Indenture and Indenture Supplement dated _________,
1999 (the Indenture being attached to and made a part of such Indenture
Supplement and filed therewith) have been duly recorded pursuant to Chapter 441
of Title 49 of the United States Code, as amended on ___________, 1999, as one
document and have been assigned Conveyance No.__________.
_______________
* This recital is to be included only in the first Indenture Supplement.
** This recital not to be included in the first Indenture Supplement.
1
NOW, THEREFORE, this Indenture Supplement witnesseth, that, to secure
the prompt payment of the principal of and Make-Whole Amount (if any) and
interest on, and all other amounts due with respect to, all Equipment Notes from
time to time outstanding under the Indenture and the performance and observance
by the Owner Trustee of all the agreements, covenants and provisions for the
benefit of the Noteholders in the Indenture and in the Participation Agreement
and the Equipment Notes, and the prompt payment of any and all amounts from time
to time owing under the Indenture or the Participation Agreement or the other
Operative Agreements by the Owner Trustee, the Owner Participant or the Lessee
to the Noteholders, and for the uses and purposes and subject to the terms and
provisions of the Indenture, and in consideration of the premises and of the
covenants contained in the Indenture, and of the acceptance of the Equipment
Notes by the Noteholders, and of the sum of $1 paid to the Owner Trustee by the
Indenture Trustee at or before the delivery hereof, the receipt whereof is
hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee and its successors and assigns, for the security and benefit
of the Noteholders, in the trust created by the Indenture, a first priority
security interest in and first mortgage lien upon, all right, title and interest
of the Owner Trustee in, to and under the following described property:
AIRFRAME
one airframe identified as follows:
FAA Registration Manufacturer' s Serial
Manufacturer Model Number Number
------------ ----- ------ ------
Bombardier Inc. Canadair Regional Jet N583ML 7327
CL-600-2B19
together with all Parts, appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time thereto
belonging, owned by the Owner Trustee and installed in or appurtenant to said
aircraft and all records, logs, manuals and data, inspection, modification and
overhaul records and all other documents at any time maintained with respect to
the foregoing property.
AIRCRAFT ENGINES
(2) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
------------ ----- --------------
General Electric Company CF34-3B1 GE-E-872529
GE-E-872530
2
together with all Parts, equipment and accessories thereto belonging, by
whomsoever manufactured, owned by the Owner Trustee and installed in or
appurtenant to said aircraft engines and all records, logs, manuals and data,
inspection, modification and overhaul records and all other documents at any
time maintained with respect to the foregoing property.
Together with all substitutions, replacements and renewals of the
property above described, and all property which shall hereafter become
physically attached to or incorporated in the property above described, whether
the same are now owned by the Owner Trustee or shall hereafter be acquired by
it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, 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 Noteholders, in the trust created by the Indenture,
all of the right, title and interest of the Owner Trustee in, to and under Lease
Supplement No. _______of even date (other than Excluded Payments, if any)
covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Noteholders for the uses and purposes and subject to the terms and
provisions set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Airframe/Engines referred to in this Indenture Supplement and the aforesaid
Lease Supplement have been delivered to the Owner Trustee and are included in
the property of the Owner Trustee and are covered by all the terms and
conditions of the Indenture and are subject to the Lien of the Indenture.
This Indenture Supplement is being delivered in the State of New York.
3
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture
Supplement to be duly executed by one of its officers thereunto authorized, this
_________day of _________, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided in the
Operative Agreements, but
solely as Owner Trustee
By:
--------------------
Name:
Title:
4
EXHIBIT B
to Trust Indenture and Security Agreement
[FORM OF EQUIPMENT NOTE]
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE
UNLESS REGISTERED UNDER SAID ACT OR LAWS OR UNLESS AN EXEMPTION IS AVAILABLE
UNDER SAID ACT OR LAWS.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity except
as otherwise expressly provided in the
Operative Agreements, but solely as
Owner Trustee
EQUIPMENT NOTE
ISSUED IN CONNECTION WITH ONE AIRCRAFT INITIALLY BEARING
UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NO.
N5____ML AND TWO GENERAL ELECTRIC ENGINES
No. R-
$ ______________ ___, _______
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided in the Operative Agreements, but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
-------------
under that certain Trust Agreement [N583ML] dated as of August 10, 1999, between
the Owner Participant named therein and the Owner Trustee (herein as such Trust
Agreement may be amended or supplemented from time to time in accordance with
the applicable provisions thereof called the "Trust Agreement"), hereby promises
---------------
to pay to _______________________________ __________________, or registered
transferees, the principal sum of _________________________________________
Dollars, in the number of installments set forth in Annex A hereto, and each
installment to be due and payable on a Payment Date and in an amount equal to
the amount set forth in Annex A hereto opposite such Payment Date, together with
interest on the unpaid principal amount hereof from time to time outstanding
from and including the date hereof until such principal amount is paid in full
at the Applicable Rate, payable in arrears on each Payment Date and on the date
this Equipment Note is paid in full. This Equipment Note shall bear interest at
the Past Due Rate on any principal hereof, and, to the extent permitted by
applicable law, interest and other amounts due hereunder, not paid
1
when due (whether at stated maturity, by acceleration or otherwise), for any
period during which the same shall be overdue, payable on demand by the holder
hereof given through the Indenture Trustee.
Interest shall be calculated on the basis of a year of 360 days
consisting of twelve 30-day months; provided that interest on past-due amounts
--------
shall be calculated on the basis of a year of 360-days and actual days elapsed.
If any sum payable hereunder falls due on a day which is not a Business Day,
then such sum shall be payable on the next succeeding Business Day, without
additional interest as a result of such extension.
All payments of principal, Make-Whole Amount and interest and other
amounts to be made to the holder hereof or under the Trust Indenture and
Security Agreement [N5___ML] dated as of August 10, 1999 (as modified, amended
or supplemented from time to time in accordance with the provisions thereof,
herein called the "Indenture", the terms defined therein and not otherwise
---------
defined herein being used herein with the same meanings) between the Owner
Trustee and Allfirst Bank, as Indenture Trustee thereunder, shall be made only
from the income and proceeds from the Indenture Estate and only to the extent
that the Owner Trustee shall have sufficient income or proceeds from the
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of the Indenture. Each holder hereof, by its
acceptance of this Equipment Note, agrees that it will look solely to the income
and proceeds from the Indenture Estate to the extent available for distribution
to the holder hereof as above provided and that none of the Owner Participant,
the Trust Company or the Indenture Trustee is personally liable to the holder
hereof for any amounts payable or any liability under this Equipment Note or
under the Indenture, except, in the case of the Trust Company or the Indenture
Trustee, as expressly provided in the Indenture or the Participation Agreement.
Principal and interest and other amounts due hereon shall be payable
in Dollars in immediately available funds prior to 12:00 noon, New York time, on
the due date thereof, to the Indenture Trustee at its Corporate Trust Department
and the Indenture Trustee shall, subject to the terms and conditions of the
Indenture, remit all such amounts so received by it to the holder hereof in
accordance with the terms of the Indenture at such account or accounts at such
financial institution or institutions as the holder hereof shall have designated
to the Indenture Trustee in writing, in immediately available funds, such
payment to be made, in the case of any such designated account in New York, New
York, prior to 2:00 p.m., New York time, on the due date thereof. In the event
the Indenture Trustee, through negligence or willful misconduct, shall fail to
make any such payment as provided in the immediately foregoing sentence after
its receipt of funds at the place and prior to the time specified above, the
Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate the holder hereof for loss of use of funds in a commercially
reasonable manner. All such payments by the Owner Trustee and the Indenture
Trustee shall be made free and clear of and without reduction for or on account
of all wire or other like charges.
Each holder hereof, by its acceptance of this Equipment Note, agrees
that, except as otherwise expressly provided in the Indenture, each payment
received by it in respect hereof shall be applied, first, to the payment of any
-----
amount (other than the principal of or Make-Whole Amount or interest on this
Equipment Note) due in respect of this Equipment Note, second, to the
------
payment
2
of Make-Whole Amount, if any, and interest hereon (as well as any interest on
overdue principal and, to the extent permitted by law, interest and other
amounts payable hereunder) due and payable hereunder, third, to the
-----
payment of the principal of this Equipment Note then due and fourth, the
------
balance, if any, remaining thereafter, to the payment of the principal of this
Equipment Note remaining unpaid, in the manner set forth in the last sentence of
Section 2.05 of the Indenture.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by the Owner Trustee pursuant to
the terms of the Indenture. The Indenture Estate is held by the Indenture
Trustee as security, in part, for the Equipment Notes. Reference is hereby made
to the Indenture and the Participation Agreement referred to therein for a
statement of the rights and obligations of the holder hereof, and the nature and
extent of the security for this Equipment Note and of the rights and obligations
of the other Noteholders, and the nature and extent of the security for the
other Equipment Notes, as well as for a statement of the terms and conditions of
the trusts created by the Indenture, to all of which terms and conditions in the
Indenture and such Participation Agreement each holder hereof agrees by its
acceptance of this Equipment Note.
There shall be maintained a Register for the purpose of registering
transfers and exchanges of Equipment Notes at the Corporate Trust Department of
the Indenture Trustee or at the office of any successor indenture trustee in the
manner provided in Section 2.07 of the Indenture. As provided in the Indenture,
this Equipment Note or any interest herein may, subject to the next following
paragraph, be assigned or transferred, and the Equipment Notes are exchangeable
for a like aggregate original principal amount of Equipment Notes of any
authorized denomination, as requested by the Noteholder surrendering the same.
Prior to the due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee may deem and treat
the person in whose name this Equipment Note is registered on the Register as
the absolute owner of this Equipment Note and the Noteholder for the purpose of
receiving payment of all amounts payable with respect to this Equipment Note and
for all other purposes whether or not this Equipment Note is overdue, and
neither the owner Trustee nor the Indenture Trustee shall be affected by notice
to the contrary.
This Equipment Note is subject to prepayment only as permitted by
Sections 2.10, 2.11 and 2.14 of the Indenture and to purchase without consent of
the holder hereof only as provided in Section 2.12 of the Indenture, and the
holder hereof, by its acceptance of this Equipment Note, agrees to be bound by
said provisions.
This Equipment Note shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose, unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized signatories on the certificate of authentication below.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
* * *
3
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized,
as of the date hereof.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Owner Trustee
By:--------------------
Name:
Title:
4
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
ALLFIRST BANK,
as Indenture Trustee
By:
-------------------------------------
Authorized Signatory
5
Annex A to
Equipment Note
SCHEDULE OF PRINCIPAL PAYMENTS
The Applicable Rate equals 8.825%.
Principal
Amount to
Payment Date Be Paid
------------ ----------
Dec 1 1999 538,907.91
Jun 1 2000 0.00
Dec 1 2000 578,911.79
Jun 1 2001 0.00
Dec 1 2001 631,557.07
Jun 1 2002 0.00
Dec 1 2002 691,125.29
Jun 1 2003 0.00
Dec 1 2003 746,092.79
Jun 1 2004 0.00
Dec 1 2004 821,665.97
Jun 1 2005 0.00
Dec 1 2005 894,717.12
Jun 1 2006 0.00
Dec 1 2006 987,097.16
Jun 1 2007 14,853.77
Dec 1 2007 742,016.28
Jun 1 2008 0.00
Dec 1 2008 871,574.78
Jun 1 2009 0.00
Dec 1 2009 656,697.28
Jun 1 2010 201,311.64
Dec 1 2010 927,226.37
Jun 1 2011 0.00
Dec 1 2011 1,311,443.30
Jun 1 2012 0.00
Dec 1 2012 0.00
Jun 1 2013 1,007,043.38
Dec 1 2013 848,729.20
Jun 1 2014 477,393.27
Dec 1 2014 0.00
Jun 1 2015 341,257.47
Note to Exhibit 10.3
The following Trust Indenture and Security Agreement is substantially identical
in all material respects to the Trust Indenture and Security Agreement filed
herewith except as follows:
Date Aircraft Tail No. Amortization
---- ----------------- ------------
August 10, 1999 N584ML *
September 10,1999 N585ML *
* As attached hereto
Annex A to
Equipment Note
SCHEDULE OF PRINCIPAL PAYMENTS
The Applicable Rate equals 8.825%
Payment Date Amount
------------ ------
Dec 1 1999 538,907.91
Jun 1 2000 0.00
Dec 1 2000 578,911.79
Jun 1 2001 0.00
Dec 1 2001 631,557.07
Jun 1 2002 0.00
Dec 1 2002 691,125.29
Jun 1 2003 0.00
Dec 1 2003 746,092.79
Jun 1 2004 0.00
Dec 1 2004 821,665.97
Jun 1 2005 0.00
Dec 1 2005 894,717.12
Jun 1 2006 0.00
Dec 1 2006 987,097.16
Jun 1 2007 14,853.77
Dec 1 2007 742,016.28
Jun 1 2008 0.00
Dec 1 2008 871,574.78
Jun 1 2009 0.00
Dec 1 2009 656,697.28
Jun 1 2010 201,311.64
Dec 1 2010 927,226.37
Jun 1 2011 0.00
Dec 1 2011 1,311,443.30
Jun 1 2012 0.00
Dec 1 2012 0.00
Jun 1 2013 1,007,043.38
Dec 1 2013 848,729.20
Jun 1 2014 477,393.27
Dec 1 2014 0.00
Jun 1 2015 341,257.47
Dec 1 2015 0.00
N584ML
Annex A to
Equipment Note
SCHEDULE OF PRINCIPAL PAYMENTS
The Applicable Rate equals 8.825%
Principal Amount to
-------------------
Payment Date Be Paid
------------ -------
Nov 1 1999 441,726.54
May 1 2000 0.00
Nov 1 2000 577,831.64
May 1 2001 3,426.97
Nov 1 2001 605,862.13
May 1 2002 0.00
Nov 1 2002 713,929.49
May 1 2003 0.00
Nov 1 2003 671,799,96
May 1 2004 0.00
Nov 1 2004 932,101.22
May 1 2005 0.00
Nov 1 2005 628,479.07
May 1 2006 285,153.56
Nov 1 2006 579,757.48
May 1 2007 318,263.35
Nov 1 2007 770,447.80
May 1 2008 0.00
Nov 1 2008 728,033.20
May 1 2009 200,544.28
Nov 1 2009 410,309.39
May 1 2010 331,150.22
Nov 1 2010 843,504.90
May 1 2011 0.00
Nov 1 2011 1,220,844.20
May 1 2012 252,685.54
Nov 1 2012 0.00
May 1 2013 1,135,610.43
Nov 1 2013 0.00
May 1 2014 904,698.88
Nov 1 2014 178,005.45
May 1 2015 363,117.26
Nov 1 2015 119,826.45
N584ML